An Increase in Government Spending

question 26

Multiple Choice

An increase in government spending

• A) increases taxes and reduces the marginal propensity to consume.
• B) increases taxes and reduces lifetime wealth of consumers.
• C) reduces taxes and reduces lifetime wealth of consumers.
• D) increases taxes and increases the marginal propensity to consume.
• E) does not affect the present value of taxes, thus does not affect the lifetime wealth of consumers.

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Definitions:

Entitativity

The perception of a group as a single, cohesive entity, regardless of the actual level of coherence or unity among its members.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together, showing the strength and direction of a relationship between them.

Correlation

Is a statistical measure that indicates the extent to which two or more variables fluctuate together, showing the strength and direction of their relationship.

Cognitive Theorist

An expert or scholar who studies the mental processes involved in acquiring knowledge and understanding, including thought, experience, and the senses.