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Describe the Impact of an Increase in Government Spending Assuming

question 8

Essay

Describe the impact of an increase in government spending assuming no change in taxes and less than full-employment output.


Definitions:

Inelastic Demand

A situation where the demand for a good or service is relatively unresponsive to changes in price.

Total Revenue

The total income received by a firm from sales of its products or services.

Increase

A rise or growth in quantity, size, number, or some other measure.

Inelastic Demand

A situation where the demand for a good or service is not significantly affected by changes in its price.

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