In which case can we be sure real GDP rises in the short run?
A)foreign economies expand and government purchases rise.
B)foreign economies expand and government purchases fall.
C)foreign economies contract and government purchases fall.
D)foreign economies contract and government purchases rise.

Question

Quizplus · Accepted Answer

When foreign economies expand, there is an increase in demand for domestic goods and services, leading to an increase in exports and a boost in real GDP. In addition, when government purchases rise, there is an increase in demand for goods and services, which stimulates production, employment, and GDP. Together, these factors can lead to a short-run increase in real GDP.

In Which Case Can We Be Sure Real GDP Rises