Expansionary Aggregate Demand-Oriented Fiscal Policy Leads, Ceteris Paribus, to

question 23

Multiple Choice

Expansionary aggregate demand-oriented fiscal policy leads, ceteris paribus, to

• A) a short-run fall in both income and the price level.
• B) a short-run rise in income and a fall in the price level.
• C) no change in the long-run equilibrium level of income and to an increase in the price Level.
• D) both an increase in the long-run equilibrium level of income and an increase in the Price level.

---

Definitions:

Investing Activities

Financial transactions involving the purchase or sale of long-term assets and investments.

Net Cash

The amount of cash and cash equivalents minus any liabilities or financial obligations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is exchanged.

Financing Activities

Transactions involving raising capital or repaying funds to and from investors and creditors, as reflected in the cash flow statement.