The Canadian Government Increases Its Expenditure on Goods and Services

question 110

Multiple Choice

The Canadian government increases its expenditure on goods and services in a time of war or increased international tension.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

• A)Real GDP increases and the price level rises.
• B)Real GDP decreases and the price level falls.
• C)Real GDP increases and the price level falls.
• D)Real GDP decreases and the price level rises.
• E)There is no change in either real GDP or the price level.

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Definitions:

Cultural Background

The cultural experiences, traditions, languages, and values inherited from one's family or society that influence one's worldview and behavior.

Ethnicity

A category of people who identify with each other based on common ancestral, social, cultural, or national experiences.

Social Capital

Personal social networks populated with people who willingly cooperate, exchange information, and build trusting relationships with each other.

Relational

Pertaining to the way in which two or more concepts, objects, or people are connected; often used within contexts involving interpersonal relationships.