In the Basic Keynesian Model,an Increase in Government Purchases

question 192

Multiple Choice

In the basic Keynesian model,an increase in government purchases

• A) reduces short-run equilibrium output.
• B) increases short-run equilibrium output.
• C) reduces potential output.
• D) increases potential output.
• E) moves short-run equilibrium output to potential output.

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Definitions:

Import Quota

Limit on the quantity of a good that can be imported.

Acreage Limitation

Policies or regulations that restrict the amount of land that can be used or owned, often for agricultural purposes.

Import Tariff

A tax imposed by a government on goods imported from other countries, often to protect domestic industries.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, due to higher market prices.