Which of the Following Would Be True If the Federal

question 58

Multiple Choice

Which of the following would be true if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

• A)Aggregate demand would increase because only federal government purchases affect aggregate demand.
• B)Aggregate demand would decrease because only state and local government purchases affect aggregate demand.
• C)Aggregate demand would increase if the change in federal purchases were smaller than the change in state and local purchases.
• D)Aggregate demand would decrease because military purchases are usually larger than state and local governments' road building budgets.
• E)Aggregate demand would remain the same because federal purchases do not affect it.

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