If the Government Increases Spending by $100 Billion but Increases

question 60

Multiple Choice

If the government increases spending by $100 billion but increases taxes by the same amount to balance the budget, what is the effect?

• A) Equilibrium real GDP increases.
• B) Equilibrium real GDP decreases by $200 billion.
• C) Equilibrium real GDP is unchanged.
• D) Equilibrium real GDP decreases by $100 billion.
• E) The price level decreases.

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Definitions:

Humanistic Therapy

A form of psychotherapy that emphasizes personal growth and the achievement of maximum potential by focusing on the individual's unique self and subjective experience.

Psychological Problems

Mental or behavioral patterns that can cause significant distress or impairment in personal functioning.

Optimal Level

The most favorable or advantageous degree of intensity or concentration for a specific function or activity.

Transference

A phenomenon in psychoanalysis where patients project feelings, attitudes, or desires onto their therapist, confusing the therapist with figures from their past.