In an Aggregate Expenditures Diagram Equal Increases in Government Spending

question 205

Multiple Choice

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

• A)shift the aggregate expenditures line downward.
• B)shift the aggregate expenditures line upward.
• C)not affect the aggregate expenditures line.
• D)reduce the equilibrium GDP.

Understand the concept and implications of rent-seeking behavior and its impact on resource allocation.

Identify the most likely beneficiaries of government income transfers under a system of representative democracy.

Grasp the reasons why private production tends to be more efficient than government production.

Recognize the biased nature of government decisions towards actions with observable short-term benefits at the expense of long-term costs.

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Definitions:

Self-Actualization

The process of realizing and fulfilling one's own potential, capacities, and talents as a way of becoming the most that one can be.

Esteem Needs

According to Maslow, these are the fourth level in the hierarchy of needs, involving the desire for self-esteem, strength, competence, and respect from others.

Preference To Be Alone

The tendency or inclination of an individual to seek solitude and avoid social interactions.

Intrinsic Motivation

Motivation based on internal factors such as organismic needs (competence, relatedness, and autonomy), as well as curiosity, challenge, and fun.