If Government Purchases Decrease, in the Short Run

question 73

Multiple Choice

If government purchases decrease, in the short run

• A)consumption will increase as income increases.
• B)consumption, investment, and net exports will increase as income increases.
• C)consumption and investment will increase as income increases.
• D)consumption will fall and net exports will increase as income falls.
• E)consumption will increase, and real GDP will remain at potential GDP.

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Definitions:

No Haggle

A pricing strategy where the seller sets a fixed price for a product or service, eliminating the need for negotiation.

CarMax Dealership

A chain of used-car dealerships in the United States known for its no-haggle pricing and comprehensive vehicle inspection process.

Fixed-price Policy

A pricing strategy where a product or service is sold at a consistent price, regardless of market changes.

Buyers

Entities or groups that acquire products or services for personal consumption, to sell again, or for manufacturing needs.