In the short run, an increase in government expenditure on goods and services ________ real GDP and ________ the price level.
A)decreases; increases
B)decreases; decreases
C)increases; decreases
D)increases; increases

Question

Quizplus · Accepted Answer

In the short run, an increase in government expenditure typically boosts aggregate demand, leading to an increase in real GDP and a higher price level due to increased economic activity and potential inflationary pressures.

In the Short Run, an Increase in Government Expenditure on Goods