What Is the Short-Run Effect of Increased Deficit Spending on an Economy

question 92

Multiple Choice

What is the short-run effect of increased deficit spending on an economy experiencing a recessionary gap?

• A) Aggregate demand increases, and the gap closes.
• B) Aggregate supply increases, closing the gap.
• C) Aggregate demand decreases, and the gap widens.
• D) Aggregate demand will increase, creating an inflationary gap.

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Definitions:

Dividend Payment Date

The specific date on which a company's dividend payment is to be made to shareholders of record.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.