Because of the multiplier, a one-time change in expenditure will...
a) have little secondary effect on real GDP
b) expand real GDP by an infinite amount
c) generate more additional real GDP than the initial change in expenditure
d) decrease saving and investment activity and thereby decrease future real GDP
d) decrease saving and investment activity and thereby decrease future real GDP
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Advocates of fixed rules believe that politicians focus more on re-election than on sound policy
a. True b. False Indicate whether the statement is true or false
Based on the graph showing an unanticipated expansionary policy, the short-run effects of an unanticipated expansionary policy are ______.
a. higher unemployment and lower prices
b. higher output, prices, and employment
c. lower output, prices, and employment
d. lower output and unchanged prices