The Equilibrium Effects of a Temporary Increase in Government Spending

question 5

Multiple Choice

The equilibrium effects of a temporary increase in government spending include

• A) an increase in the real wage and an increase in the real interest rate.
• B) an increase in the real wage and a decrease in the real interest rate.
• C) a decrease in the real wage and an increase in the real interest rate.
• D) a decrease in the real wage and a decrease in the real interest rate.

---

Definitions:

Economic Prospects

The expected future financial performance or potential for growth of an economy, region, or specific market.

Native American Tribes

Indigenous peoples in the United States with distinct cultures, languages, and histories, recognized as sovereign nations by the federal government.

Windings

Coils of wire in electrical devices, such as motors and generators, that generate magnetic fields when current flows through them or induce current when they rotate in a magnetic field.