A Direct Expenditure Offset Occurs When an Increase in Government

question 28

Multiple Choice

A direct expenditure offset occurs when an increase in government spending

• A) results in an increase in household saving for retirement.
• B) is followed by an increase in consumer spending
• C) results in a decrease in private spending.
• D) is followed by an increase in taxes.

---

Definitions:

Laspeyres Price Index

A measure of the change in the aggregate price level of a basket of goods and services over time, using the quantities purchased in the base year.

Paasche Price Index

The Paasche Price Index measures the change in the price level of a basket of goods and services between two periods, using the quantities of the current period.

Strong Axiom

A principle or rule with robust implications or requirements, though more context is needed for a specific field application.

Revealed Preference

An economic concept referring to the idea that consumers' choices, reflected in their purchasing decisions, reveal their preferences for certain goods or services over others.