Suppose the Economy Is Initially Operating at Full Employment

question 21

Multiple Choice

Suppose the economy is initially operating at full employment. A fiscal policy action that results in an increase in the size of the budget deficit will cause which of the following in the long run?

• A) an increase in real GDP.
• B) have no effect on both the level and composition of real GDP.
• C) a reduction in the price level.
• D) change the composition of real GDP.

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Definitions:

Women

Adult human females, often discussed in contexts related to gender-specific issues, rights, and roles in society.

Canada

A North American country consisting of ten provinces and three territories, known for its vast landscapes, multicultural diversity, and as a member of the Commonwealth.

Wright Mills

A sociologist known for his work on the structure of power in American society and for coining the term "sociological imagination."

Power Elite

A term describing a small group of people who hold a disproportionate amount of power, wealth, and privilege in a society, often influencing major decisions and policies.