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Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the government purchases increase. All else equal (with regard to the AD-IA model), relative to the baseline level, in the long run, consumption is: A. higher. B. lower. C. the same.

Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the government purchases increase. All else equal (with regard to the AD-IA model), relative to the baseline level, in the long run, consumption is: A. higher. B. lower. C. the same.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the government purchases increase. All else equal (with regard to the AD-IA model), relative to the baseline level, in the long run, consumption is: A. higher. B. lower. C. the same.
Transcribed Image Text:Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the government purchases increase. All else equal (with regard to the AD-IA model), relative to the baseline level, in the long run, consumption is: A. higher. B. lower. C. the same.
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