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

---

Definitions:

Autonomic Arousal

This involves the automatic activation of physiological responses in the body, such as heart rate and sweating, typically in reaction to stress or perceived threats.

Physiological Arousal

The condition of having one's body in a heightened state of alertness and physical readiness, often as a response to stimuli.

Cognitive Experience

The processes involved in acquisition, organization, and use of knowledge, including perception, memory, and reasoning.

Cannon-Bard Theory

A psychological theory proposing that emotions and physiological reactions such as sweating and trembling occur simultaneously, not sequentially.