Starting from Long-Run Equilibrium,the Long-Run Impact(s)of a War That Increases

question 70

Multiple Choice

Starting from long-run equilibrium,the long-run impact(s) of a war that increases government purchases,compared to the original equilibrium,would be

• A) higher inflation.
• B) higher output.
• C) higher inflation and higher output.
• D) lower inflation and lower output.
• E) no change in inflation or output.

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Definitions:

Face Value

The nominal or original value printed on a financial instrument, such as a bond or stock certificate.

Notes Payable

Notes payable are written agreements where a borrower agrees to pay back the principal amount along with interest to a lender at a future date.

Accrued Interest

Accrued Interest is the interest that has accumulated on a bond or loan since the last interest payment date but has not yet been paid.

Liquidity

The measure of how quickly and easily an asset can be converted into cash without significant loss of value.