Starting from Long-Run Equilibrium, the Long-Run Impact of a War

question 107

Multiple Choice

Starting from long-run equilibrium, the long-run impact of a war that raises government purchases, compared to the original equilibrium, is:

• A)higher inflation and the same output.
• B)lower inflation and lower output.
• C)lower inflation and the same output.
• D)higher inflation and higher output.

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Definitions:

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