If the Shifts in AD That Will Result from Policy

question 13

Multiple Choice

If the shifts in AD that will result from policy changes are fully and accurately anticipated, an increase in government purchases or a decrease in taxes would result in which of the following in the short run?

• A)​a higher level of real output and a higher price level
• B)​a higher level of real output but no change in the price level
• C)​a higher price level and a reduced level of real output
• D)​a higher price level but no change in real output

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Definitions:

Vicious Cycle

A sequence of reciprocal cause and effect in which two or more elements intensify and aggravate each other, leading to a deteriorating situation.

Self-concept

An individual's perception of themselves, encompassing their beliefs, feelings, and self-awareness.

Negative Behavior

Actions or conduct that are destructive, harmful, or counterproductive to oneself or others.

Self-concept

An individual's understanding and assessment of their own abilities, behavior, and characteristics.