In Any Decision About Stimulating the Economy with a Fiscal

question 102

Multiple Choice

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases) ,the government must weigh the short-run benefits of ________ against the long-run costs of ________.

• A)a higher price level; unemployment
• B)increased potential output; a higher price level
• C)a higher price level; lower real GDP
• D)increased real GDP; higher economic growth
• E)increased economic activity; lower economic growth

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Definitions:

Abstract Qualities

Traits or characteristics that are not tangible or concrete, often relating to concepts, ideas, or values.

Construct Validity

Consistency between a high score on a test and high level of a construct such as intelligence or leadership ability, as well as between mastery of this construct and successful performance of the job.

Criterion-related

Pertains to a method of evaluating the validity of a test by comparing its results with an external criterion.

Contexts

The circumstances or environments in which events occur, affecting their understanding and interpretation.