The Immediate Effect on GDP of Ibrahim's Purchase of a Government

question 7

Multiple Choice

The immediate effect on GDP of Ibrahim's purchase of a government bond is

• A)a decrease in consumption because Ibrahim has less money to spend
• B)an increase in government spending
• C)an increase in investment
• D)a decrease in investment because less money is available to him for further investment
• E)nonexistent,since no real goods and services have been produced

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Definitions:

Deregulation

The process of removing or reducing state regulations, typically in the economic sphere, to encourage more efficient and competitive markets.

S & L Institutions

Savings and Loan institutions, which are financial establishments focusing on accepting savings deposits and making mortgage loans.

Antitrust Suits

Legal actions taken against companies or entities to break up monopolies or to prevent anti-competitive practices, aiming to promote fair competition for the benefit of consumers.

Ivan Boesky

A former American stock trader who became infamous in the 1980s for his role in a major insider trading scandal.