Which of the Following Would Increase the Size of the Government

question 73

Multiple Choice

Which of the following would increase the size of the government purchases multiplier?

• A)an increase in the tax rate
• B)an increase in the quantity of imports purchased by households from an increase in income
• C)a decrease in the amount of consumption spending by households from an increase in income
• D)a decrease in the amount saved by households from an increase in income
• E)an increase in the importance of government spending to the economy

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on when choosing one option over another.

Bushel

A measure of volume that is used primarily in agriculture, equal to about 35.24 liters in the USA.

Absolute Advantage

The ability of an entity to produce a good or offer a service at a lower cost per unit, using fewer resources, than competitors or another entity.

Specialization And Trade

The practice where individuals or entities focus on the production of specific goods or services to trade for other goods or services rather than producing everything they need by themselves.