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If the Government Increases Spending and There Is a Complete

Question 8

Multiple Choice

If the government increases spending and there is a complete direct expenditure offset, then


A) aggregate demand and real Gross Domestic Product (GDP) will not change.
B) aggregate demand and real Gross Domestic Product (GDP) will increase by the amount of the spending increase.
C) the price level will drop.
D) the government spending multiplier will be greater than zero.

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