In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP)?
A) Equilibrium real Gross Domestic Product (GDP) will increase beyond the full-employment level and there will also be an inflationary effect.
B) Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level.
C) Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP).
D) The government's deficit spending will increase equilibrium real Gross Domestic Product (GDP).
B
You might also like to view...
When the English pound appreciated against a colonial currency, this signaled
(a) that colonists needed more colonial currency to buy an English pound. (b) that colonists needed less colonial currency to buy an English pound. (c) that colonists needed more colonial and Spanish currency to buy an English pound. (d) nothing of economic importance.
The total fixed cost curve:
A. varies with the quantity of inputs used. B. decreases with output. C. increases with output. D. remains constant regardless of output.