In the Long Run, You Would Expect Fiscal Expansion to

question 23

Multiple Choice

In the long run, you would expect fiscal expansion to

• A) increase real interest rates but leave real GDP and prices unchanged.
• B) increase prices but leave real interest rates and real GDP unchanged.
• C) reduce real interest rates even as prices and real GDP climb.
• D) increase prices, real GDP, and real interest rates to some degree or other depending on circumstance.
• E) none of the above.

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Definitions:

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, expressed as a percentage of the investment's gain relative to its cost.

Minimum Required Rate

The lowest acceptable rate of return on an investment, often used in capital budgeting to assess the feasibility of projects.

Total Sales

The aggregate revenue generated from the sale of goods or services over a specific period.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including a mortgage, have been paid.