Spending on the Military Is Essentially Categorized as Government Purchases

question 9

Multiple Choice

Spending on the military is essentially categorized as government purchases.How do increases in spending on a military campaign affect the aggregate demand curve?

• A)They will move the economy down along a stationary aggregate demand curve.
• B)They will move the economy up along a stationary aggregate demand curve.
• C)They will shift the aggregate demand curve to the right.
• D)They will shift the aggregate demand curve to the left.
• E)As military personnel are not considered part of the labour force, a military campaign will have no impact on the economy.

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Definitions:

Paid in Capital in Excess

The amount received from investors for stock, exceeding its par or stated value, also known as additional paid-in capital.

Par Value

The face value of a stock or bond as specified by the issuing company, often used in accounting to record the equity or debt issued.

Preferred Stock

A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock, often with dividends that are paid out before those of common shares.

Organization Expense

Organization expense refers to the costs associated with forming a business entity, such as legal fees, filing fees, and costs of issuing stock.