Using the AD-AS Model, an Increase in Government Expenditure

question 158

Multiple Choice

Using the AD-AS model, an increase in government expenditure

• A) has no impact on real GDP.
• B) has no impact on real GDP, but will increase potential GDP.
• C) increases both real GDP and the price level.
• D) has a full multiplier effect on real GDP, leaving the price level unchanged in the long run.

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Definitions:

Phonemes

The smallest units of sound in a language that are capable of conveying a distinct meaning.

Single Phoneme

The smallest unit of sound in a language that can distinguish one word from another.

Ed

An abbreviation often used for education, referring to the process of teaching, training, or learning to improve knowledge and develop skills.

Morphemes

The smallest units of meaning in a language, which can be words themselves or parts of words like prefixes.