Starting from Long-Run Equilibrium, a Large Increase in Government Purchases

question 44

Multiple Choice

Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ______ gap in the short-run and ____ inflation and ____ output in the long-run

• A) expansionary; higher; potential
• B) expansionary; lower; potential
• C) expansionary; higher; higher
• D) expansionary; higher; lower

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