In the Long Run, What Effect Does a Government's Deficit

question 67

Multiple Choice

In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP) ?

• A) Government deficit spending will increase equilibrium real Gross Domestic Product (GDP).
• B) Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP).
• C) Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level.
• D) Higher government deficits will raise equilibrium Gross Domestic Product (GDP) above the full-employment level and also have an inflationary effect.

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Definitions:

Extracellular

Located or occurring outside of a cell or cells, often referring to the fluid, substances, or cellular components in the space outside cells.

Heart Rate

The number of heartbeats per unit of time, usually measured in beats per minute (bpm).

Hyperpolarized

The state of a cell membrane when its potential becomes more negative than its normal resting potential.

Sympathetic Stimulation

Activation of the sympathetic nervous system, leading to "fight or flight" responses such as increased heart rate and blood flow to muscles.