Figure 11-4 What Happens in the Economy Illustrated in Figure

question 20

Multiple Choice

Figure 11-4 What happens in the economy illustrated in Figure 11-4 if government purchases increase by the amount necessary to achieve full employment?

• A) The AD curve shifts to the right, the SRAS curve shifts to the left, and long-run equilibrium is achieved.
• B) The AD curve shifts to the right, the price level increases, and long-run equilibrium is achieved.
• C) The AD curve shifts to the right, the price level increases, and unemployment increases.
• D) The AD curve shifts to the left, the price level increases, and employment decreases.
• E) The SRAS curve shifts to the left, the price level decreases, and long-run equilibrium is achieved.

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Definitions:

Hatch Act

A U.S. federal law that prohibits civil service employees in the executive branch from engaging in some forms of political activity.

Political Management

The strategic planning, organization, and direction of political campaigns, parties, or candidates, aiming to achieve electoral success and influence policy-making.

Spoils System

A practice where a political party, after winning an election, gives government jobs to its supporters, friends, and relatives as a reward for working toward victory, and as an incentive to keep working for the party.

Civil Service

Employment in public sector organizations, typically within government, where appointments and promotions are determined by merit and qualifications rather than political affiliation.