Increases in Government Spending Will Lower the Long-Term Growth Rate

question 60

Multiple Choice

Increases in government spending will lower the long-term growth rate of GDP if it lowers ________ spending and the government purchases ________ goods and not ________ goods.

• A)net export spending; investment; consumption
• B)consumption; investment; consumption
• C)net export spending; consumption; investment
• D)investment; consumption; investment

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Definitions:

Guarantor

A guarantor is a person or entity that agrees to be responsible for another's debt or obligations, should the original party fail to meet their responsibilities.

Guarantee

A formal promise or assurance, typically in writing, that certain conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality.

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by the party to be charged, in order to be legally enforceable.

Indemnity

A security or protection against a loss or other financial burden.