Suppose, for a Certain Economy, Real and Potential GDP Are

question 173

Multiple Choice

Suppose, for a certain economy, real and potential GDP are initially equal. Then government purchases permanently increase. Compared to the baseline, we would expect to see, in the long run,

• A)an increase in consumption, a decrease in net exports, and no change in investment.
• B)no change in consumption, investment, or net exports.
• C)no change in consumption and a decrease in both net exports and investment.
• D)a decrease in the sum of consumption, investment, and net exports.
• E)an increase in consumption, a decrease in investment, and a decrease in net exports.

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Definitions:

Government Intervention

Actions taken by a government to influence or regulate various activities, industries, or economic markets for the public good.

Democratic Societies

Societies where the government is elected by the people, typically featuring principles of equality, freedom of speech, and fair play under a rule of law.

Industrialized Nations

Countries characterized by a high level of industrial activity, infrastructure, and higher standards of living.

Media Regulation

The control or governance of media enterprises and content, typically by governmental or independent bodies, to ensure ethical standards and public welfare.