Which of the Following Statements Is FALSE

question 338

Multiple Choice

Which of the following statements is FALSE ?

• A) Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand.
• B) Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures.
• C) Taxes and transfer payments affect aggregate demand by changing disposable income.
• D) An increase in disposable income leads to a decrease in aggregate demand.

Recognize the historical context and purposes behind the establishment of the Federal Reserve System.

Understand the different tools of monetary policy, including open market operations, the discount rate, and reserve requirements.

Identify the effects of monetary policy decisions on financial institutions and markets.

Explain the concept of the deposit expansion multiplier and how it affects the banking system and money supply.

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