Which of the Following Statements Best Explains the Effects of Transfer

question 49

Multiple Choice

Which of the following statements best explains the effects of transfer payments and taxes on aggregate spending?

• A)Transfer payments and taxes affect aggregate spending directly,just as consumption does.
• B)Transfer payments and taxes affect aggregate spending indirectly by first changing disposable income and thereby changing consumption.
• C)Changes in the amount of transfer payments and taxes cancel each other and therefore have no influence on any economic variable.
• D)Transfer payments and taxes affect disposable income but have no effect on consumption.
• E)Transfer payments affect disposable income,but taxes do not.

---

Definitions:

Intangibles

Non-physical assets that cannot be seen, touched, or physically measured, such as patents, trademarks, and goodwill.

Middle Class

A socio-economic group between the working class and upper class, characterized by moderate income levels and stable employment.

Situation Analysis

An assessment process that examines an organization's internal and external environment to understand current conditions and identify future opportunities and threats.

Data

Factual information used as a basis for reasoning, discussion, or calculation; often numeric, it can be analyzed to inform decisions.