In an Economy with Intertemporal Substitution, an Increase in Government

question 21

Multiple Choice

In an economy with intertemporal substitution, an increase in government purchases

• A) has no temporary or permanent effect on real growth.
• B) decreases real growth temporarily.
• C) increases real growth permanently.
• D) increases real growth temporarily.

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Definitions:

Lecturer

A person who gives talks or speeches on specific subjects, often in an academic or educational setting.

Cognitive Miser

A model of social cognition that characterises people as using the least complex and demanding cognitions that are able to produce generally adaptive behaviours.

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Mental shortcuts or rules of thumb that simplify decision-making processes, often leading to quick but sometimes inaccurate judgments.

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The comprehensive understanding an individual has of themselves, inclusive of beliefs, attitudes, and perceptions.