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:

Chemicals

Chemicals are substances formed from chemical reactions between elements or compounds, and they have specific chemical compositions and properties.

Production Possibilities

Different combinations of goods and services that an economy can produce using all of its resources efficiently.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, representing the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Increasing Costs

This refers to a situation where the costs of production increase as the output level increases, often seen in industries with limited resources.