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While the economy is at potential output, the government increases spending. The following table describes the aggregate demand curves before and after an increase in government spending, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP (Before) 2.0 1.0 0.0 -1.0 -2.0 Real GDP (After) 4.0 3.0 2.0 1.0 0.0 In the long run, what is the inflation rate after the increase in government spending? Inflation 3.0 4.0 5.0 7.0 9.0

While the economy is at potential output, the government increases spending. The following table describes the aggregate demand curves before and after an increase in government spending, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP (Before) 2.0 1.0 0.0 -1.0 -2.0 Real GDP (After) 4.0 3.0 2.0 1.0 0.0 In the long run, what is the inflation rate after the increase in government spending? Inflation 3.0 4.0 5.0 7.0 9.0

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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While the economy is at potential output, the government increases spending. The following table describes the aggregate demand curves before and after an increase in government spending, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP (Before) 2.0 1.0 0.0 -1.0 -2.0 Real GDP (After) 4.0 3.0 2.0 1.0 0.0 In the long run, what is the inflation rate after the increase in government spending? Inflation 3.0 4.0 5.0 7.0 9.0
Transcribed Image Text:While the economy is at potential output, the government increases spending. The following table describes the aggregate demand curves before and after an increase in government spending, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP (Before) 2.0 1.0 0.0 -1.0 -2.0 Real GDP (After) 4.0 3.0 2.0 1.0 0.0 In the long run, what is the inflation rate after the increase in government spending? Inflation 3.0 4.0 5.0 7.0 9.0
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