If a "Liberal" Wanted to Decrease Aggregate Demand, Which of the Following

question 30

Multiple Choice

If a "liberal" wanted to decrease aggregate demand, which of the following would she tend to favor?

• A)An increase in government spending, because it will increase the size of the public sector.
• B)A decrease in government spending, because it keeps the public sector small.
• C)An increase in transfer payments, because it has a larger multiplier than tax changes.
• D)An increase in taxes, because it makes the public sector larger.

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Definitions:

Personal Assets

Assets owned by an individual as opposed to those owned by businesses or governments, including tangible and intangible items.

Original Capital Investment

The initial sum of money used to start a business or investment, often used for assets, inventory, and other startup costs.

Net Income

The total profit or loss of a company after all revenues and expenses have been accounted for, often referred to as the bottom line.

Salary Allowances

Additional benefits provided to employees on top of their base salary, which could include housing, transportation, or health benefits.