Increases in Government Spending Will Lower the Long-Term Growth Rate

question 10

Multiple Choice

Increases in government spending will lower the long-term growth rate of GDP if it lowers ________ and the government purchases ________ goods and not ________ goods.

• A) net export spending; investment; consumption
• B) consumption; investment; consumption
• C) net export spending; consumption; investment
• D) investment; consumption; investment

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Definitions:

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

Return

A document containing details about an individual's or entity's income, deductions, and tax liabilities filed with the tax authorities.

Basis

The initial value of an asset for tax purposes, used to calculate depreciation, amortization, and determines the gain or loss on the asset's sale.

Stock

A type of security that signifies ownership in a corporation and represents a claim on part of the company's assets and earnings.