20. To which of the following does the so-called "stagflationary dilemma" refer? I. The ineffectiveness of expansionary stabilization policies to address stagflation IL The prospect of lower inflation or unemployment if stabilization polices are used III. The ineffectiveness of contractionary stabilization policies to address stagflation a. I only b. II only Ill only d. I and III e. I, II and III Figure 4 LRAS Price Level SRAS PLz PL AD PL AD, Y1 Y, YI Real GDP 21. In Figure 4 above, which of the following represents the size of an inflationary output gap as the economy operates above the full-employment level of output? a. YI - Yz b. Y1 - Yp C. YP d. Y2 - Yl e. Y2 - Yp 22. When economic conditions are such that current equilibrium output is $25 billion, potential output is $50 billion, and the marginal propensity to consume is 0.8, a Keynesian economist would most likely recommend which of the following policies? a. Increasing taxes by $5 billion b. Decreasing taxes by $5 billion C. Increasing government spending by $5 billion d. Decreasing government spending by $5 billion e. Both increasing government spending and decreasing taxes by $5 billion