In the long run, what effect does a government's deficit spending ...

[Jkov05]

In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP)?
 
  A) Equilibrium real Gross Domestic Product (GDP) will increase beyond the full-employment level and there will also be an inflationary effect.
  B) Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level.
  C) Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP).
  D) The government's deficit spending will increase equilibrium real Gross Domestic Product (GDP).

Question 2

A reduction in nominal wages will cause which of the following?
 
  A) a leftward shift in the short-run aggregate supply curve to shift to the left
  B) a movement along the short-run aggregate supply curve
  C) a shift of both the short-run and long-run aggregate supply curves
  D) a rightward shift in the short-run aggregate supply curve

[fur]

Answer to Question 1

B

Answer to Question 2

D

[Jkov05]

YES! Correct, THANKS for helping me on my review

[bdobbins]

Thanks for the timely response, appreciate it