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PRICE 130 125 *5 120 115 110 ms 100 95 90 A132 A03 35 ED mmsuuusuuusmusmusa REAL GDP [Billions] ADI is the initial aggregate demand curve and AS is the aggregate supply curve for an economy. Then the government pursues an expansionary scal policy action. A02 shows the initial increase in aggregate demand and ADS shows the final increase in spending after the scal policy action has worked its way through the economy {by means of the multiplier process]. Assume that the government increases spending to stimulate the economy. How large is the initial spending increase? (ex: ityour answer is $20 billion, then enter: 20} (Points: 1} 0 Less than $5 billion @1 $5 billion 0 $20 billion 0 $25 billion \fOne problem with using scal policy to solve economic problems is that: (Points: 1] C) Fiscal policy can only increase, not decrease, aggregate demand. C) Fiscal policy has no multiplier effect, which means that large changes in spending are required. (Q) Fiscal policy is controlled by elected ofcials. C) Fiscal policy has immediate effects that are unpredictable