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-Refer to the Above Figure

Question 119

Multiple Choice

-Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from to . Interest rates have started to rise. Which of the following statements is true in the short run? A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates. B) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived. C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates. D) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates.
-Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from -Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from to . Interest rates have started to rise. Which of the following statements is true in the short run? A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates. B) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived. C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates. D) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates. to -Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from to . Interest rates have started to rise. Which of the following statements is true in the short run? A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates. B) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived. C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates. D) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates. . Interest rates have started to rise. Which of the following statements is true in the short run?


A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates.
B) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived.
C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates.
D) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates.

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