If the Government Decreases Aggregate Demand When the Economy Is

question 13

Multiple Choice

If the government decreases aggregate demand when the economy is at both short-run and long-run equilibrium,the full long-run effect of this fiscal policy will be to

• A)decrease real GDP.
• B)decrease the price level.
• C)decrease either the real GDP or the price level,depending on the length of the time lag.
• D)decrease both real GDP and the price level.

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