Respuesta :
The "rise" in price levels, the "return" of output towards its natural level, and the "return" of a unemployment rate towards its natural level are all long-term repercussions of increased government spending.
Explain long-term effects of increased government spending:
A growth in aggregate demand is probably going to result from increased government spending (AD). In the short run, this may result in greater growth. Additionally, it can cause inflation.
- Depending over which area of government expenditure is increased, higher government spending also would affect the supply-side of both the economy.
- Spending directed toward infrastructure development may boost productivity and expand the long-term aggregate supply.
- Spending on welfare or pensions may alleviate inequality, but it may also displace more beneficial private sector investment.
Thus, long-term effects of increased government spending include a "rise" in price levels, a "return" of output to its natural level, and a "return" of the unemployment rate to its natural level.
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The correct question is-
In the long run, as a result of the increase in government spending, the price level___________Correct , the quantity of output___________ Correct the natural level of output, and the unemployment rate_______Correct the natural rate of unemployment.
