Using the AD- AS Model, an Increase in Government Expenditure

question 13

Multiple Choice

Using the AD- AS model, an increase in government expenditure

• A) has no impact on real GDP, but will increase potential GDP.
• B) increases both real GDP and the price level.
• C) has a full multiplier effect on real GDP, leaving the price level unchanged in the long run.
• D) has no impact on real GDP.

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