If the Government Increases Its Spending, Which of the Following

question 21

Multiple Choice

If the government increases its spending, which of the following would tend to reduce the size of the multiplier?

• A) higher taxes for the finance of the additional spending
• B) higher interest rates as the result of additional borrowing to finance the spending
• C) the flow of the spending into sectors where the unemployment rate is low
• D) all of the above

---

Definitions:

Unconscious Forces

Deep-seated feelings, thoughts, and desires in the unconscious mind that influence behavior and personality.

Conscious Perception

The awareness of the environment and one’s own interior thoughts and feelings.

Physiological Factors

Biological aspects that influence an individual's physical health and psychological state, such as genetic predispositions, brain chemistry, and hormone levels.

Objective

Uninfluenced by personal feelings or opinions in considering and representing facts; impartial and factual.