A Fiscal Expansion Will

question 22

Multiple Choice

A fiscal expansion will

• A)raise both the price level and real income in the long run.
• B)reduce both the price level and the real income in the short run.
• C)raise real income but leave the price level unaffected in the long run.
• D)raise both the price level and real income in the short run.

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Definitions:

Depreciation Expense

Breaking down the investment in a solid asset over the time it serves its purpose.

Service Revenue

Income earned by a company for the provision of services to its customers.

Prepaid Expense

An expense that has been paid in advance and recorded as an asset until it becomes an actual expense.

Accrued Revenue

Income earned but not yet received, representing goods or services provided to customers on credit.