Starting from Long-Run Equilibrium, a Large Increase in Government Purchases

question 113

Multiple Choice

Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

• A)expansionary; higher; potential
• B)expansionary; higher; higher
• C)recessionary; lower; lower
• D)recessionary; higher; potential

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