In a Closed Economy,if the Government Is Already Running a Budget

question 60

Multiple Choice

In a closed economy,if the government is already running a budget deficit and then decides to increase spending by $50 billion without raising taxes,one can expect

• A) investment spending to fall by $50 billion.
• B) consumption to fall by $50 billion.
• C) saving to rise by $50 billion.
• D) consumption and investment to collectively fall by $50 billion.
• E) gross domestic product (GDP)to increase by $50 billion.