In the Short Run, an Increase in Government Expenditure on Goods

question 89

Multiple Choice

In the short run, an increase in government expenditure on goods and services ________ real GDP and ________ the price level.

• A) increases; rises
• B) increases; falls
• C) decreases; rises
• D) decreases; falls

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Definitions:

Investor

An individual or organization that allocates capital with the expectation of achieving a financial return.

Promissory Note

An economic tool comprising a formal pledge by one entity to give a specific amount of money to another, either upon request or at a predetermined future time.

Term Deposit

A type of financial account where money is deposited for a fixed period and a predetermined interest rate, offering higher interest rates than savings accounts but with restricted access to funds.

Simple Interest

A technique for computing interest in which the interest expense is calculated solely on the initial amount of the principal.