If the Level of Government Spending Increases at the Same

question 45

Multiple Choice

If the level of government spending increases at the same time the Fed is pursuing contractionary monetary policy, we know that

• A)incomes will fall.
• B)the interest rate will rise.
• C)incomes will rise.
• D)the interest rate will fall.

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Definitions:

Consumption

The act of using goods and services for personal needs or wants, including the process by which these goods and services are acquired.

Satisfaction

The feeling of pleasure or fulfillment that comes from meeting a desire, expectation, or goal.

Marginal Utility

The additional satisfaction or benefit received by consuming one more unit of a good or service.

Total Utility

The total satisfaction or benefit received by consuming a certain amount of goods or services.