Assume That Real and Potential GDP Are Initially Equal

question 152

Multiple Choice

Assume that real and potential GDP are initially equal. If government purchases permanently increase, we would expect that in the short run

• A)consumption and investment will be higher than baseline, and net exports will be lower.
• B)consumption will be higher than baseline, and net exports and investment will be the same.
• C)consumption, investment, and net exports will be higher than baseline.
• D)consumption and net exports will be higher than baseline, and investment will be the same.
• E)consumption will be higher than baseline, net exports will be lower, and investment will be the same.

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Definitions:

Personal Property

Assets or belongings that are not permanently attached to, or part of, real estate.

Testate Succession

The legal process of distributing a deceased person's assets in accordance with their will.

Intestate Succession

The process by which the property of a deceased person is distributed when they die without a valid will, based on laws of the state or country.

Life Estate

An ownership interest in which the holder has the right to possess the property until her or his death.