Which of the Following Would Reduce GDP by the Greatest

question 38

Multiple Choice

Which of the following would reduce GDP by the greatest amount?

• A)a $20 billion increase in taxes
• B)$20 billion increases in both government spending and taxes
• C)$20 billion decreases in both government spending and taxes
• D)a $20 billion decrease in government spending

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Definitions:

Technological Breakthroughs

Technological breakthroughs refer to significant advancements or discoveries in technology that drastically change existing processes, products, or services, often leading to new industries or revitalization of old ones.

Investment Projects

Initiatives or activities undertaken to allocate resources in the expectation of future benefits or returns.

Loanable Funds

The total supply of money available for borrowing or spending in the economy, including savings and investments.

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.