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Suppose the Government Closes an Expansionary Gap with a Change

Question 82

Multiple Choice

Suppose the government closes an expansionary gap with a change in government spending.What will the decrease in government spending lead to?  


A)  a decrease in the real GDP and a decrease in the price level 
B)  a decrease in real GDP and an increase in the price level 
C)  an increase in real GDP and an increase in the price level 
D)  an increase in real GDP and a decrease in the price level

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