Suppose That Real GDP Equals Potential GDP, but the Government

question 17

Multiple Choice

Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full- employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy,

• A) an equilibrium with real GDP less than potential GDP will occur.
• B) aggregate demand will increase.
• C) potential GDP decreases.
• D) None of the above answers is correct..

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Definitions:

Post-purchase Dissonance

The feeling of regret, doubt, or anxiety that a consumer may experience after making a significant purchase, fearing that they may have made the wrong choice.

Product Needs

The specific features, benefits, and solutions that customers seek in a product to satisfy certain requirements or solve problems.

Unconscious Need Level

The level at which people do not know why they buy a product.

Perceptive Observations

The act of keenly and accurately noting and interpreting subtle details or changes, often critical in understanding context or behaviors in various fields like psychology, sales, and research.