Assuming a Long-Run Aggregate Supply Curve, a Decrease in Government

question 111

Multiple Choice

Assuming a long-run aggregate supply curve, a decrease in government spending results in ________ in output and ________ in price level.

• A) no change; an increase
• B) no change; a decrease
• C) a decrease; a decrease
• D) an increase; no change

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Definitions:

Bank

A financial institution licensed to receive deposits and make loans, offering various other financial services.

Currency Requirement

The necessity for a form of payment to be accepted as valid currency within a financial transaction.

Negotiability

The ability of a financial instrument to be transferred from one party to another with the title passing legally to the transferee.

United States

A federal republic consisting of fifty states, a federal district, and various territories, characterized by its democratic government and diverse population.