If Government Spending Rises More Than Anticipated, Then Equilibrium Output

question 69

Multiple Choice

If government spending rises more than anticipated, then equilibrium output should _____ and the equilibrium price level should _____ in the short run.

• A) rise, rise
• B) rise, fall
• C) fall, rise
• D) fall, fall

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Definitions:

Cheap Labor

Workforce available for employment at low wage rates, often used by companies to reduce production costs.

Expensive Labor

refers to the high costs associated with hiring workers, often due to skilled labor demands, labor laws, or other factors increasing wages.

Standard of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area.

North American Free Trade Agreement

An agreement among the United States, Canada, and Mexico designed to remove tariff barriers between the three countries, promoting trade.