
If aggregate demand intersects aggregate supply in the vertical range of the aggregate supply curve, then, other things being equal, an increase in government spending will
A) raise real GDP by the amount indicated by the government spending multiplier and leave the price level unchanged.
B) lower real GDP by an amount equal to the spending increase and reduce inflation.
C) raise the price level and leave real GDP unchanged.
D) raise both real GDP and the price level by a multiple of the initial spending increase.
E) have no effect on real GDP or the price level because all private investment will be crowded out.
Correct Answer:
Verified
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Q9: Figure 13.1 Q10: If the price level _ as real Q11: According to the Employment Act of 1946, Q13: Which of the following statements about taxation Q14: Taxes affect aggregate demand Q15: Government spending equals the sum of these Q16: If the government wants to close a Q17: To close a GDP gap, government should
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A) indirectly by changing
A)
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