When Government Purchases Decrease, the Short-Run Effect Can Be Described

question 66

Multiple Choice

When government purchases decrease, the short-run effect can be described as the period of time when

• A)there is no spending balance.
• B)inflation is constant.
• C)real GDP and inflation are adjusting to their new long-run levels.
• D)real GDP is below potential GDP.
• E)the inflation adjustment line has not reached the new intersection of aggregate demand at the level of potential GDP.

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