In a Keynesian Model,a Temporary Increase in Government Purchases Would

question 71

Multiple Choice

In a Keynesian model,a temporary increase in government purchases would cause output to ________ and the domestic real interest rate to ________,in the short run.

• A)remain unchanged; increase
• B)remain unchanged; decrease
• C)increase; increase
• D)increase; decrease

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Definitions:

Surplus

An excess of production or supply over demand, often leading to lower prices.

Shortage

A market condition where the demand for a good or service exceeds its supply at a particular price.

Bags Per Month

A measurement of quantity, often used to describe the production or consumption rate of bags within a monthly period.

Market Equilibrium

occurs in a market when the quantity supplied equals the quantity demanded, typically represented by the intersection of supply and demand curves.