If Government Increases the Size of Its Full-Employment Surplus, We

question 197

Multiple Choice

If government increases the size of its full-employment surplus, we can:

• A)assume that government is causing interest rates to rise.
• B)not determine government's impact on the economy without also knowing the status of the actual budget.
• C)assume that government is having a contractionary effect on the economy.
• D)assume that government is having an expansionary effect on the economy.

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Definitions:

Supply

The overall quantity of a particular product or service accessible to buyers.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market balance.

Leather

A durable and flexible material created by tanning animal hides, used in making clothing, furniture, and various goods.