If the Economy Is in a Recession,and the Government Increases

question 130

Multiple Choice

If the economy is in a recession,and the government increases its spending to bring the economy back to its long-run equilibrium,the long-run level of output will:

• A)return,with higher prices.
• B)return,as well as original price level.
• C)return,with lower prices.
• D)increase,with higher prices.

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Definitions:

Elastic

describes a condition in which the quantity demanded or supplied of a good or service is highly responsive to changes in its price.

Corporate Profits Tax

A levy imposed on the income or profit earned by corporations or analogous legal entities.

Partnerships

A legal form of business operation between two or more individuals who share management and profits.

Proprietorships

Businesses owned and operated by a single individual, with no legal distinction between the owner and the business entity.