Under Which of the Following Conditions Will a Change in Government

question 108

Multiple Choice

Under which of the following conditions will a change in government purchases have the greatest effect on the economy in the short run?

• A) The aggregate demand curve is relatively flat.
• B) The aggregate demand curve is relatively steep.
• C) The short-run aggregate supply curve is relatively flat.
• D) The aggregate demand curve is vertical.
• E) The short-run aggregate supply curve is vertical.

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Definitions:

Assets

Resources owned or controlled by a company that are expected to produce economic value or future benefits.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, often referred to as shareholders' equity or owners' equity.

Bond Issuance Costs

Costs related to issuing bonds and debt securities, such as underwriting fees, legal fees, and registration fees, which are amortized over the life of the bond.

Underwriters

Financial specialists who assess and undertake the risk of another party for a fee, often in the context of issuing insurance policies or investment securities.