Answered: In the long run, an increase in…

In the long run, an increase in government purchases will raise the price level, but not production or employment. True or false

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the long run, an increase in government purchases will raise the price level, but not production or employment. True or false

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Step 1: Introduce the Concept of Government Purchases and Macroeconomic Equilibrium

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Step 2: Understand the Short-Term Effects on Aggregate Demand

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Step 3: Recognize the Limitations of the Economy's Capacity

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Step 4: Analyze the Implications for the Price Level

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Step 5: Distinguish Between Short-Term and Long-Term Outcomes

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