Suppose, for a Certain Economy, Real and Potential GDP Are

question 173

Multiple Choice

Suppose, for a certain economy, real and potential GDP are initially equal. Then government purchases permanently increase. Compared to the baseline, we would expect to see, in the long run,

• A)an increase in consumption, a decrease in net exports, and no change in investment.
• B)no change in consumption, investment, or net exports.
• C)no change in consumption and a decrease in both net exports and investment.
• D)a decrease in the sum of consumption, investment, and net exports.
• E)an increase in consumption, a decrease in investment, and a decrease in net exports.

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Definitions:

Receiver Division

The unit within a company that receives goods or services from another segment of the company, often in a transfer pricing scenario.

Transfer Price

The price charged for goods or services transferred between departments or divisions of the same company or between affiliated companies.

Pump Division

The pump division within a company refers to the segment that specializes in the production and development of pump units and systems.

Transfer Price

The cost at which products or services are exchanged between departments or divisions within the same organization.