In the Classical Model,a Temporary Increase in Government Purchases Causes

question 28

Multiple Choice

In the classical model,a temporary increase in government purchases causes

• A)a decrease in output and the real interest rate.
• B)a decrease in output and an increase in the real interest rate.
• C)an increase in output and a decrease in the real interest rate.
• D)an increase in output and the real interest rate.

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Definitions:

Cash Dividend

It's a payment made by a company out of its profits to shareholders, distributed in cash, based on the number of shares held.

Expense

An outflow of resources or incurrence of liabilities that result from a company's operations, aimed at generating revenue.

Prior Period Adjustment

A correction of errors in financial statements that were made in previous periods, affecting retained earnings on the balance sheet.

Financial Statements

Official records that detail the financial activities and condition of a business, including income statement, balance sheet, and cash flow statement.