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

question 202

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 no impact on real GDP.
• D) has a full multiplier effect on real GDP, leaving the price level unchanged in the long run.

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Definitions:

Scientific Method

A systematic and logical approach to discovering how things in the universe work, based on observation, hypothesis, experimentation, and conclusion.

Bystander Effect

A behavior observed in social settings where the presence of other individuals decreases the likelihood of offering aid to a victim.

Sociocultural Perspective

A view that emphasizes the importance of societal and cultural factors in shaping behavior and cognitive processes.

Clinical Psychologist

A professional specialized in diagnosing and treating mental illness, emotional disturbances, and dysfunctional behavior.