In the Medium Run, a Fiscal Contraction That Causes a Decrease

question 17

Multiple Choice

In the medium run, a fiscal contraction that causes a decrease in the budget deficit:

• A) affects the level of output but not its composition.
• B) affects both the level and composition of output.
• C) will not affect the composition of output but will affect the price level.
• D) is neutral.
• E) affects only the composition of output.

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