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:

Money

A medium of exchange, in the form of coins and banknotes; used to facilitate transactions for goods and services.

Happiness

A state of well-being and contentment characterized by emotions ranging from contentment to intense joy.

James-Lange Theory

A theory of emotion that proposes emotions result from the awareness of physiological responses to stimuli.

Vent Anger

The act of expressing or releasing feelings of anger in a manner that can be constructive or destructive.