The long-run income effect (the effect of real GDP changes on spending) of decreased government purchases is that consumption
A)is higher.
B)is the same, investment is higher, and net exports are lower.
C)and net exports are the same.
D)and net exports are lower.
E)is higher, and investment is higher.

Question

Quizplus · Accepted Answer

The Answer of The long-run income effect (the effect of real GDP changes on spending) of decreased government purchases is that consumption
A)is higher.
B)is the same, investment is higher, and net exports are lower.
C)and net exports are the same.
D)and net exports are lower.
E)is higher, and investment is higher.

The Long-Run Income Effect (The Effect of Real GDP Changes