Because of Intertemporal Substitution,an Increase in Government Spending Growth Results

question 151

Multiple Choice

Because of intertemporal substitution,an increase in government spending growth results in:

• A) a leftward shift of both the LRAS curve and the AD curve.
• B) a leftward shift of the LRAS curve but a rightward shift of the AD curve.
• C) a rightward shift of both the LRAS curve and the AD curve.
• D) a rightward shift of the LRAS curve but a leftward shift of the AD curve.

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Definitions:

Failing Business

A business that is unable to continue operating due to financial difficulties, leading to bankruptcy or liquidation.

Economic Failures

Situations where market outcomes lead to inefficiency, often resulting in resources not being allocated optimally.

Commercial Failures

Situations where businesses are unable to continue operations due to financial problems, often leading to bankruptcy or liquidation.

Golden Parachutes

Large financial compensation packages awarded to top executives if they are forced out of a company due to a takeover or merger, intended to discourage hostile takeovers.