A $1 Increase in Government Spending on Goods and Services

question 44

Multiple Choice

A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because

• A) government spending is more employment intensive than is either consumption or investment spending.
• B) government spending increases the money supply and a tax reduction does not.
• C) a portion of a tax cut will be saved.
• D) taxes vary directly with income.

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Definitions:

Arthritis

A group of painful, inflammatory conditions affecting joints and connective tissues, leading to stiffness and decreased range of motion.

Damage

Physical harm caused to something in such a way that it is impaired or its value is diminished.

Good

Describes something as being satisfactory, beneficial, or morally right.

Groin Pull

A strain or injury to the muscles of the inner thigh, often occurring in activities requiring sudden changes in direction or speed.