Suppose that the economy is at full employment when government expenditure increases by $10 billion. In the long run

Name: Suppose that the economy is at full employment when government expenditure increases by $10 billion. In the long run
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In the long run, the economy is at full employment, so any increase in government expenditure will lead to a rise in the price level due to increased demand, but real GDP will remain unchanged as the economy is already producing at its full capacity.

Suppose That the Economy Is at Full Employment When Government