Suppose That the Government Could Stimulate Spending in One of the Following

question 39

Multiple Choice

Suppose that the government could stimulate spending in one of the following expenditure categories. In which category would the spending increase contribute most to an expansion of the country's production possibilities frontier?

• A) consumption goods
• B) government purchases
• C) net exports
• D) capital goods

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Definitions:

Risk-averse

A description of an investor's preference for lower risk options, valuing stability over potential higher returns.

Total Utility

The complete enjoyment or advantage gained from the consumption of a specified overall amount of a product or service.

Expected Value

The anticipated value of an investment in the future, taking into account various possible outcomes weighted by their respective probabilities.

Disability Insurance

A type of insurance that provides income in the event that a worker is unable to perform their work and earn money due to a disability.