26. Assume the economy is at full employment. Which is the most likely effect of a decrease in government spending? A) output, prices, and interest rates will all increase in the medium run B) output, prices, and interest rates will all decrease in the long run C) prices and interest rates will decrease in the medium and long run while output will be negatively affected in the medium run but not in the long run
26. Assume the economy is at full employment. Which is the most likely effect of a decrease in government spending? A) output, prices, and interest rates will all increase in the medium run B) output, prices, and interest rates will all decrease in the long run C) prices and interest rates will decrease in the medium and long run while output will be negatively affected in the medium run but not in the long run
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
Section: Chapter Questions
Problem 8PA
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