Suppose There Is an Increase in Government Spending

question 71

Multiple Choice

Suppose there is an increase in government spending.To stabilize output,the Federal Reserve would

• A)increase government spending.
• B)increase the money supply.
• C)decrease government spending.
• D)decrease the money supply.

---

Definitions:

Enjoyment

The state or experience of taking pleasure or satisfaction from something.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they derive from it.

Surplus

An excess of production or supply over demand, often leading to lower prices.

Market Economy

An economic system where supply and demand from consumers and producers determine the production of goods and services.