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A Temporary Decrease in Government Purchases Causes the Real Interest

question 98

Multiple Choice

A temporary decrease in government purchases causes the real interest rate to ________ and output to ________ in the short run,before prices adjust to restore equilibrium.


Definitions:

Lawn-mowing

The act of cutting the grass of a lawn to maintain its appearance and health.

Perfectly Competitive

A market structure where there are many buyers and sellers, all of whom have negligible impact on the market price.

Marginal Cost

The increment in total spending due to the manufacture of one more unit of a product or service.

Fixed Cost

Fixed Cost is a business expense that does not change with the level of goods or services produced within a certain period.

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