Suppose the Government Permanently Reduces Spending in an Effort to Reduce

question 21

Multiple Choice

Suppose the government permanently reduces spending in an effort to reduce the budget deficit. In the new long-run equilibrium, output will ________ and the price level will ________.

• A) decrease; decrease
• B) remain unchanged; decrease
• C) remain unchanged; increase
• D) decrease; remain unchanged
• E) increase; decrease

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Definitions:

Managerial Orientation

The approach or attitude of management toward core aspects of business operations, such as decision-making, planning, and control.

Early Twentieth Century

A period marked by significant technological, social, and political changes globally, spanning from 1901 to 2000.

Buying Power

The capacity of an individual or group to purchase goods or services, often influenced by income and economic conditions.

Wants

Desires or needs that drive consumer behavior, often going beyond basic necessities.