In the Medium Run, a Fiscal Expansion That Causes an Increase

question 39

Multiple Choice

In the medium run, a fiscal expansion that causes an increase in the budget deficit will affect which of the following?

• A) Only the composition of output.
• B) The level of output but not its composition.
• C) The level of employment but not its composition.
• D) Both the level and composition of output.
• E) Both the level and composition of employment.

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Definitions:

Wash Sale

A stock transaction where an investor sells securities at a loss and repurchases the same or substantially identical securities shortly before or after the sale.

Installment Method

A method of reporting income from a sale over several years, recognizing revenue as payments are received.

Securities Market

A financial market where securities such as stocks, bonds, and options are bought and sold, crucial for raising capital and allocating resources in the economy.

Gross Profit Percentage

A financial metric that represents the gross profit as a percentage of net sales, providing insight into the efficiency of a company's production and sales operations.