In the Short Run, with Prices Fixed, How Would an Increase

question 1

Multiple Choice

In the short run, with prices fixed, how would an increase in government spending affect the DD-AA equilibrium?

• A) It will increase output and appreciate the currency.
• B) It will increase output and depreciate the currency.
• C) It will decrease output and appreciate the currency.
• D) It will decrease output and depreciate the currency.
• E) It will increase output and have no effect on the currency.

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Definitions:

Evaluation Criteria

Evaluation criteria are standards or benchmarks used to assess the quality, value, performance, or suitability of something or someone.

Trust Account

A bank account in which one party (the trustee) such as an attorney, holds funds belonging to another person (such as a client), a bank account into which funds advanced to a law firm by a client are deposited. Also called an escrow account.

Escrow Account

A financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction.

Advanced Funds

Money paid or received before a transaction or event has occurred, often as part of an agreement or to cover initial costs.