Suppose Real and Potential GDP Are Initially Equal

question 32

Multiple Choice

Suppose real and potential GDP are initially equal. If government purchases change, which of the following best explains what will happen first?

• A)Potential GDP will change by the same amount as aggregate expenditure.
• B)The AD curve will shift.
• C)Both the AD curve and the IA line will shift.
• D)The IA line will shift.
• E)There will be movement along the AD curve.

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Definitions:

Fast-Twitch Fibers

Muscle fibers that are designed for quick and powerful movements, fatiguing more rapidly than slow-twitch fibers.

Slow-Twitch Fibers

Muscle fibers that are fatigue resistant and capable of continuous, extended contraction, often utilized in endurance activities.

Mitochondria

Membrane-bound organelles found in the cytoplasm of eukaryotic cells, known as the powerhouse of the cell due to their role in producing energy.

Blood Supply

The circulation of blood in an organism, providing essential nutrients and oxygen to tissues and organs.