Suppose an economy is in long-run equilibrium when a fiscally conservative government cut expenditures. As a result Multiple Choice aggregate supply will decrease and real GDP will increase in the short run. aggregate supply will increase and real GDP will increase in the short run. aggregate demand will decrease and real GDP will decrease in the short run. aggregate demand will decrease and real GDP will increase in the short run.

Suppose an economy is in long-run equilibrium when a fiscally conservative government cut expenditures. As a result Multiple Choice aggregate supply will decrease and real GDP will increase in the short run. aggregate supply will increase and real GDP will increase in the short run. aggregate demand will decrease and real GDP will decrease in the short run. aggregate demand will decrease and real GDP will increase in the short run.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 3P

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