67. Suppose that there is a sudden drop in government spending. What happens to the economy in the short-run, assuming it was originally at its long-run equilibrium? (A) GDP and prices fall. (B) GDP falls and prices rise. (C) GDP and prices rise. (D) GDP rises and prices fall.

67. Suppose that there is a sudden drop in government spending. What happens to the economy in the short-run, assuming it was originally at its long-run equilibrium? (A) GDP and prices fall. (B) GDP falls and prices rise. (C) GDP and prices rise. (D) GDP rises and prices fall.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter1: Ten Principles Of Economics

Section: Chapter Questions

Problem 10QR

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67. Suppose that there is a sudden drop in government spending. What happens to the
economy in the short-run, assuming it was originally at its long-run equilibrium?
(A) GDP and prices fall.
(B) GDP falls and prices rise.
(C) GDP and prices rise.
(D) GDP rises and prices fall.

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