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Suppose There Is an Increase in Government Spending

Question 9

Multiple Choice

Suppose there is an increase in government spending. Such a fiscal policy action will cause:


A) the natural level of output to rise.
B) the natural level of output to fall.
C) ambiguous effects on the natural level of output.
D) no effect on the natural level of output.
E) the natural level of output rises when the natural real interest rate falls.

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