The Immediate Effect of a Purchase of a Government Bond

question 21

Multiple Choice

The immediate effect of a purchase of a government bond on the gross domestic product (GDP) is_____.

• A)a decrease in consumption
• B)an increase in government spending
• C)an increase in investment
• D)a decrease in investment
• E)nonexistent,since no real goods and services have been produced

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Definitions:

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders, often reinvested in the business.

Restricted

Restricted typically refers to assets or securities that are not freely tradable or accessible due to regulations or specific conditions.

Cash Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings in cash.

Corporation Liability

Legal and financial obligations a corporation owes to others, which can involve debts, lawsuits, or other claims against the business.