In the Short Run, When Government Purchases Decrease, Real GDP

question 141

Multiple Choice

In the short run, when government purchases decrease, real GDP falls by more than the change in government purchases because

• A)prices increase.
• B)taxes increase.
• C)consumption decreases.
• D)investment decreases.
• E)taxes decrease.

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Definitions:

Asset Improvements

Enhancements or upgrades made to a company's assets to increase their efficiency, productivity, or value.

Ordinary Maintenance

Ordinary maintenance involves the routine upkeep and repairs necessary to maintain assets in their current condition, without significantly enhancing their value or extending their life.

Asset Improvements

Expenditures made to increase the service life, operating efficiency, or productive capacity of an asset.

Ordinary Maintenance

Routine upkeep and repairs to keep equipment and facilities in working order, as opposed to major renovations or upgrades.