In an Effort to Reduce the Federal Budget Deficit,Congress Has

question 83

Multiple Choice

In an effort to reduce the federal budget deficit,Congress has decided to reduce the amount of money spent on Medicare and Medicaid.How does this affect the equilibrium price and quantity of medical services?

• A) They are not affected.
• B) They have risen as demand has increased,but supply has remained constant.
• C) They have fallen because demand has decreased and supply has remained constant.
• D) They have risen because supply and demand have decreased.
• E) Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

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Definitions:

National Saving

The total amount of savings in a country, equal to the sum of private and public savings, representing the portion of national income not used for consumption or government spending.

Consumption

Consumption involves the use of goods and services by households, constituting one of the main components of aggregate demand in an economy.

Government Purchases

Spending by the government on goods and services that are included in the calculation of the country's gross domestic product.

Demand Curve

An illustration that depicts the inverse relationship between the price of an item and the quantity demanded by consumers within a certain period.