Suppose the Economy Is Initially Operating at Full Employment

question 134

Multiple Choice

Suppose the economy is initially operating at full employment. A reduction in the size of the budget deficit will cause which of the following in the short run?

• A) a recessionary gap.
• B) an increase the price level and a reduction in real GDP.
• C) an increase in the price level with no change in real GDP.
• D) an increase in real GDP and an increase in the price level.

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Definitions:

Phallic Stage

A phase in Freudian psychosexual development, occuring between ages three and six, where the focus of the libido is on the genital area.

Personality Development

The continuous growth and change in an individual's personality characteristics and behaviors throughout their lifespan.

Marry

The legal or formal union of two people as partners in a personal relationship, commonly recognized by law or cultural norms.

Oedipal Complex

A concept in psychoanalytic theory referring to a child’s unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.