Suppose That Real GDP Equals Potential GDP, but the Government

question 54

Multiple Choice

Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full-employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy

• A) aggregate demand will increase.
• B) an equilibrium with real GDP less than potential GDP will occur.
• C) potential GDP decreases.
• D) None of the above answers is correct.

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Definitions:

Information Power

A type of marketing channel power within an administered vertical marketing system in which one party (e.g., the manufacturer) provides or withholds important information to influence the actions of another party (e.g., the retailer).

Market Data

Information related to prices, supply, demand, and dynamics of the market that helps businesses to make informed decisions.

Walmart

A multinational retail corporation operating a chain of hypermarkets, discount department stores, and grocery stores, known for its extensive product selection and low prices.

Corporate Vertical Marketing System

A structured form of marketing system where subsequent stages of production and distribution are under a single ownership.