If the Aggregate Supply Curve Has Its Normal Shape, Deficit

question 5

Multiple Choice

If the aggregate supply curve has its normal shape, deficit spending will increase

• A)both GDP and the price level at about the same rate.
• B)the price level before it increases real GDP.
• C)the price level but decrease real GDP.
• D)real GDP before it increases the price level.

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Definitions:

Regulatory Capture

A situation where regulatory agencies are dominated by the industries or interests they are charged with regulating, often leading to a conflict of interest.

Corporate Relocations

The process of a company moving its operations, headquarters, or facilities from one location to another.

Mohair Subsidies

Financial incentives provided by governments to support and encourage the production of mohair, a silk-like fabric or yarn made from the hair of the Angora goat.