What Effect Would an Increase in Government Purchases,combined with an Increase

question 116

Multiple Choice

What effect would an increase in government purchases,combined with an increase in taxes,have on AD?

• A)It would leave AD unchanged.
• B)It would decrease AD.
• C)It would have an indeterminate effect on AD.
• D)It would increase AD.

---

Definitions:

Policy Activists

Individuals or groups advocating for changes in public policy to advance particular goals or interests.

Non-Interventionists

Individuals or policies favoring minimal diplomatic and military involvement by a country in the affairs of other nations.

Monetarists

Economists who emphasize the role of governments in controlling the amount of money in circulation to regulate the economy and control inflation.

Classical Economic Theory

A school of thought in economics that emphasizes free markets, the importance of limited government intervention, and the role of supply and demand in an economy.