The Diagram Below Is for a Closed Economy Which Begins

question 86

Multiple Choice

The diagram below is for a closed economy which begins in long- run equilibrium at Y*.
FIGURE 32- 3
-Refer to Figure 32- 3. Suppose the government implements an expansionary fiscal policy, which increases the budget deficit. When the economy reaches its new long- run equilibrium, how has the composition of national income changed?

• A)the composition of national income at Y* is unchanged
• B)net exports have risen
• C)investment has fallen
• D)net exports have fallen
• E)consumption has increased

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Definitions:

Diffusion of Responsibility

A socio-psychological phenomenon where individuals are less likely to take action or feel a sense of personal responsibility in the presence of a large group.

Unconscious

Pertaining to the part of the mind that is not currently in focal awareness and holds thoughts, memories, and desires beyond immediate consciousness.

Prosocial Behaviour

Prosocial behavior includes actions intended to benefit others, characterized by helping, sharing, or cooperating.

Population

A group of individuals of the same species living in a particular area and capable of interbreeding.