If the Government Increased Social Security Benefits and Decreased the Salaries

question 196

Multiple Choice

If the government increased Social Security benefits and decreased the salaries of government workers by the same amount, which of the following is the expected immediate effect?

• A) an increase in the budget deficit and government purchases of goods and services
• B) an increase in the budget deficit, but no change in government purchases of goods and services
• C) an increase in the budget deficit and a decrease in government purchases of goods and services
• D) no change in the budget deficit, because there has been no change in government purchases of goods and services
• E) no change in the budget deficit, because government purchases of goods and services have decreased by the same amount as transfer payments have increased

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