If President Obama Wanted to Decrease Aggregate Demand, Which of the Following

question 97

Multiple Choice

If President Obama wanted to decrease aggregate demand, which of the following would he 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 would not make the public sector smaller.

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