Which of the Following Is True of Government Purchases

question 21

Multiple Choice

Which of the following is true of government purchases?

• A)Government purchases are independent of the price level.
• B)Government purchases are independent of the level of real GDP.
• C)Government purchases are independent of consumption.
• D)Government purchases are independent of investment.
• E)Government purchases are independent of the amount saved by households.

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Definitions:

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine the relative value of each currency.

Exchange Rates

The rate at which one currency can be exchanged for another, influencing international trade and investments.

Gold Standard

A monetary system in which the value of a country's currency is directly linked to a specified amount of gold, facilitating stable exchange rates and limiting inflation.

Monetary Policies

Government or central bank policies aimed at controlling the money supply and interest rates to influence economic activity.