Which of the Following Best Explains What Will Happen If

question 110

Multiple Choice

Which of the following best explains what will happen if government purchases decline?

• A)For any given rate of inflation, real GDP will decrease.
• B)For any given rate of inflation, real GDP will increase.
• C)For any given rate of inflation, potential GDP will increase.
• D)There will be an upward movement along the AD curve.
• E)There will be a downward movement along the AD curve.

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Definitions:

Entitlement Programs

Government-sponsored programs that guarantee certain benefits to a particular segment of the population.

Transfer Payments

Payments made by governments to individuals without the expectation of a direct return service or goods, often as part of welfare or social security programs.

Social Security

A program run by the government that offers monetary assistance to individuals who are retired, have disabilities, or are surviving dependents of deceased employees.

Social Security Payments

Government-provided financial support that people receive upon retirement, disability, or other eligibility criteria to ensure a basic level of income.