Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

• A)A change in government purchases affects income.However, the change in income does not affect consumption.
• B)A change in government purchases does not affect income or consumption.
• C)A change in government purchases affects GDP, which is the same as income.The change in income affects consumption.
• D)A change in government purchases affects GDP but not income.
• E)A change in government purchases has no effect on GDP, but it does affect consumption.

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Definitions:

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods, given a set of inputs.

Unattainable

Describes a goal, level, or condition that cannot be achieved or reached, often used in the context of economic production and efficiency.

After Trade

After trade refers to the state of an economy, market, or trading partners following the completion of trade transactions, often highlighting changes in economic indicators or balances.

Production

The process of creating goods and services using inputs such as labor, capital, and raw materials.