If the Government Spends $1 Billion to Create a Wetlands

question 15

Multiple Choice

If the government spends $1 billion to create a wetlands preserve, taxes increase $1 billion to pay for it, and the marginal propensity to consume is 0.75, GDP:

• A) remains unchanged.
• B) increases by $1 billion.
• C) increases by $4 billion.
• D) decreases by $1 billion.

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Definitions:

Matching Principle

An accounting principle that dictates expenses should be matched with the revenues they help generate, within the same accounting period.

Franchise Arrangements

Agreements where one party (the franchisor) grants another party (the franchisee) the right to use its trademark or brand name and operate a business under its business model.

Exclusive Right

A legal provision granting someone the sole authority to undertake a particular activity or use a specific property.

Franchisor's Name

The legal name of the entity that grants the license to a franchisee for the conducting of a business under the franchisor's trademarks and business model.