Using the AD- AS Model, an Increase in Government Expenditure

question 13

Multiple Choice

Using the AD- AS model, an increase in government expenditure

• A) has no impact on real GDP, but will increase potential GDP.
• B) increases both real GDP and the price level.
• C) has a full multiplier effect on real GDP, leaving the price level unchanged in the long run.
• D) has no impact on real GDP.

---

Definitions:

Visual Representation

The use of diagrams, drawings, or other visual formats to present information or data clearly and effectively.

Organisation's Objectives

The specific, measurable goals that a company aims to achieve in order to fulfill its mission and vision.

Standard Costs

Predetermined costs that are established as benchmarks for measuring performance.

Performance Measurement

The process of evaluating the efficiency and effectiveness of an action or organization, often using metrics or KPIs.