An Increase in Government Expenditure on Goods and Services

question 51

Multiple Choice

An increase in government expenditure on goods and services

• A) increases aggregate demand.
• B) increases the aggregate quantity demanded.
• C) decreases the aggregate quantity demanded.
• D) decreases aggregate demand.

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Definitions:

Forward Exchange Rate

The agreed-upon exchange rate for currencies to be exchanged on a specified future date.

Swaps

Financial derivatives contracts where two parties agree to exchange one stream of cash flows for another, often used to manage risk or speculate.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Currencies

Systems of money in common use, particularly for people in a nation.