The long-run result of government intervention in responding to a recession is:
A) the same level of output at higher prices.
B) higher level of output at higher prices.
C) higher level of output at lower prices.
D) lower level of output at the same prices.

Question

Quizplus · Accepted Answer

In the long run, government intervention, such as fiscal or monetary policy, can lead to an increase in aggregate demand, which may result in the same level of output but at higher prices due to inflationary pressures.

The Long-Run Result of Government Intervention in Responding to a Recession