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:

Republic of Venice

A sovereign state and maritime republic from the 7th century to 1797, known for its economic, cultural, and military power in the Mediterranean region.

Bellini

An influential Italian Renaissance painter known for his keen use of color and development of a more naturalistic portrayal of figures.

Official Painter

An artist who is officially commissioned by a government or monarchy to create portraits or document events.

Assumption of the Virgin

A Christian belief and artistic theme representing the bodily taking up of the Virgin Mary into Heaven at the end of her earthly life.