Suppose government purchases have decreased and the economy has reached a new long-run equilibrium. Which of the following best describes the new equilibrium?
A) Nothing has changed because real GDP is again equal to potential GDP.
B) Consumers are better off because taxes are lower.
C) The economy is growing more rapidly because investment is higher.
D) The economy is better off because consumption is higher.
E) The economy is growing more slowly because consumption is higher.
Correct Answer:
Verified
Q30: The tendency of prices to adjust over
Q31: The long-run effect of a decline in
Q32: The long-run effect of a decrease in
Q33: The long-run income effect (the effect of
Q34: The difference between the medium run and
Q36: If government purchases decrease, in the short
Q37: If government purchases change, which variable is
Q38: In the short run, when government purchases
Q39: An economic recovery occurs only if the
Q40: Suppose government purchases have decreased. Which of
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents