In the Long Run, a Decrease in the Budget Deficit

question 53

Multiple Choice

In the long run, a decrease in the budget deficit (caused by, for example, a decrease in government spending) will:

• A) only affect the price level and the composition of output.
• B) not affect the level of output, but does affect the composition of output.
• C) only affect the price level.
• D) cause an increase in the level of output.
• E) cause a decrease in the level of output.