In the Long Run, What Effect Does a Government's Deficit

question 59

Multiple Choice

In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP) ?

• A) The government's deficit spending will increase equilibrium real Gross Domestic Product (GDP).
• B) Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP).
• C) Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level.
• D) Equilibrium real Gross Domestic Product (GDP) will increase beyond the full-employment level and there will also be an inflationary effect.

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Definitions:

Anna Freud

A pioneering child psychoanalyst and the daughter of Sigmund Freud, known for her theoretical and clinical contributions to the field of psychoanalysis.

Internalizing Problem

Psychological issues that are manifested inwardly, such as anxiety, depression, and withdrawal, as opposed to externalizing problems that involve outward behaviors towards others.

Externalizing Problem

Behaviors directed outwardly, typically involving conflicts with other individuals or society, such as aggression or defiance.

Mood Disorder

A psychological disorder characterized by the elevation or lowering of a person's mood, such as depression or bipolar disorder.