Suppose There Is a Change in Government Purchases

question 123

Multiple Choice

Suppose there is a change in government purchases.Under what circumstances will such a change have the greatest effect on the economy in the short run?  

• A) if the aggregate demand curve is relatively flat 
• B) if the aggregate demand curve is relatively steep 
• C) if the short-run aggregate supply curve is relatively flat 
• D) if the aggregate demand curve is vertical