When Government Purchases Decrease, the Short-Run Effect Can Be Described

Multiple Choice

When government purchases decrease, the short-run effect can be described as the period of time when

A) there is no spending balance.
B) inflation is constant.
C) real GDP and inflation are adjusting to their new long-run levels.
D) real GDP is below potential GDP.
E) the inflation adjustment line has not reached the new intersection of aggregate demand at the level of potential GDP.