In the Short Run, with Prices Fixed, How Would an Increase

question 1

Multiple Choice

In the short run, with prices fixed, how would an increase in government spending affect the DD-AA equilibrium?

• A) It will increase output and appreciate the currency.
• B) It will increase output and depreciate the currency.
• C) It will decrease output and appreciate the currency.
• D) It will decrease output and depreciate the currency.
• E) It will increase output and have no effect on the currency.

---

Definitions:

Voting Shares

Shares that give the shareholder the right to vote on company matters, such as electing directors and approving company policies.

Purchase

The act of acquiring goods or services in exchange for money, signifying a transaction between two parties.

Share Issue

The process by which a company distributes its shares to investors, thereby raising capital.

Consolidated Net Income

The aggregate amount of net income earned by a parent company and its subsidiaries, after tax and interest, presented in a single figure.