If the Government Starts a New Program Where It Buys

question 38

Multiple Choice

If the government starts a new program where it buys every family that lives in Florida a new air conditioner,one may argue this could lead to

• A) a budget surplus.
• B) a shift in aggregate supply.
• C) supply-side fiscal policy.
• D) a savings shift.
• E) crowding-out.

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Giffin Good

A type of good for which demand increases as its price increases, contrary to the typical law of demand.

Income Effect

The influence of income adjustments on the demand for goods or services, whether in an individual's finances or within an economy.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading to consumers replacing more expensive items with less costly alternatives.