An Increase in Spending Has What Impact in the Short

question 53

Multiple Choice

An increase in spending has what impact in the short run and long run?

• A) Only prices are impacted in the short run, and only output is affected in the long run.
• B) Only output is impacted in the short run, and only prices are affected in the long run.
• C) Both prices and output are impacted in the short run, and only prices are affected in the long run.
• D) Both prices and output are impacted in the short run, and only output is affected in the long run.

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Definitions:

Input

Resources used in the production process of goods and services, including raw materials, labor, and capital.

Decreasing Returns

A concept in economics where each additional unit of input results in a progressively smaller increase in output, often observed in production processes.

Marginal Product

The additional output that is produced by using one more unit of a particular input while holding other inputs constant.

Factor

An element or component, such as land, labor, and capital, that is used in the production of goods and services.