When Government Spending Is Increased, the Amount of the Increase

question 380

Multiple Choice

When government spending is increased, the amount of the increase in aggregate demand primarily depends on

• A) the average propensity to consume.
• B) the size of the multiplier.
• C) income taxes.
• D) exchange rates.

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Definitions:

Tender

An offer to perform an obligation or a bid to buy securities, goods, or services at a specific price.

Tender of Payment

The presentation of money or a means of payment to fulfill a debt or obligation, usually in the exact amount owed.

Conforming Goods

Goods that meet the specifications and standards outlined in a sales contract.

Legal Tender

Money that must be accepted if offered in payment of a debt; the legally recognized form of payment within a given jurisdiction.