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:

Hedonism

The ethical theory that pleasure (in the sense of the satisfaction of desires) is the highest good and proper aim of human life.

Universalism

The ideological belief in universal applicability or effectiveness of concepts across different cultures or situations.

Socioeconomic Status

A measure of an individual's or family's economic and social position relative to others, based on income, education, and occupation.

PTSD

Posttraumatic Stress Disorder, a mental health condition triggered by experiencing or witnessing a terrifying event, characterized by flashbacks, nightmares, and severe anxiety.