The Effect of an Increase in Government Spending on Aggregate

question 26

Multiple Choice

The effect of an increase in government spending on aggregate demand is greatest if the government finances it by

• A)increasing taxes
• B)borrowing from the domestic public
• C)borrowing indirectly from the Fed
• D)selling Treasury bills to banks
• E)issuing long-term government bonds

Understand the basic principles of action potentials and their all-or-none law.

Comprehend the structure and function of synapses, including the role of synaptic vesicles and neurotransmitters.

Distinguish between electrical and chemical signaling in the nervous system.

Recognize the methods used to investigate neural communication and synaptic function.

---

Definitions:

Increasing-Cost Industry

An industry in which production costs increase as output expands, often due to scarce resources or rising input prices.

Industry Expands

The process of a sector in the economy growing due to an increase in demand, production, and often, employment.

Allocative Efficiency

A state of the economy where the distribution of resources among different uses is optimal, ensuring that the goods being produced are what consumers prefer the most.

Producing Output

The process of generating goods or services as the result of economic activity.