What Is an Effect of an Increase in Government Purchases

question 100

Multiple Choice

What is an effect of an increase in government purchases?

• A) It decreases interest rates.
• B) It results in a decrease in the government deficit.
• C) It crowds out investment spending by business.
• D) It decreases money demand.

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Definitions:

Economic Stabilization

Governmental efforts to reduce the amplitude of economic cycles, aiming to achieve stable growth, low inflation, and reduced unemployment.

Policy Activists

Individuals or groups advocating for changes in public policy to advance particular goals or interests.

Non-Interventionists

Individuals or policies favoring minimal diplomatic and military involvement by a country in the affairs of other nations.

Monetarists

Economists who emphasize the role of governments in controlling the amount of money in circulation to regulate the economy and control inflation.