Assume That Real and Potential GDP Are Initially Equal

Multiple Choice

Assume that real and potential GDP are initially equal. If government purchases permanently increase, we would expect that in the short run

A) consumption and investment will be higher than baseline, and net exports will be lower.
B) consumption will be higher than baseline, and net exports and investment will be the same.
C) consumption, investment, and net exports will be higher than baseline.
D) consumption and net exports will be higher than baseline, and investment will be the same.
E) consumption will be higher than baseline, net exports will be lower, and investment will be the same.