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Assume that a temporary increase in G refers to the government spending an extra 200...

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Finance

Assume that a temporary increase in G refers to the government spending an extra 200 million dollars on domestic goods and services for one year. Assume further that a permanent increase in G refers to the government spending an extra 200 million dollars on domestic goods and services forever. Choose the most appropriate option

A. Relative to a permanent increase in G, the increase in Y and the decrease in E in the short-run is greater when the increase in G is temporary

B. The decrease in Y and increase in E in the short-run is the same irrespective of whether the increase in G is temporary or permanent

C. Relative to a temporary increase in G, the increase in Y and the decrease in E in the short-run is greater when the increase G is permanent

D. The increase in Y and decrease in E in the short-run is the same irrespective of whether the increase in G is temporary or permanent

E. A permanent increase in G has no effect on Y in the short-run but a temporary increase in G increases Y

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