If the Government Increases Spending and There Is a Complete

question 8

Multiple Choice

If the government increases spending and there is a complete direct expenditure offset, then

• A) aggregate demand and real Gross Domestic Product (GDP) will not change.
• B) aggregate demand and real Gross Domestic Product (GDP) will increase by the amount of the spending increase.
• C) the price level will drop.
• D) the government spending multiplier will be greater than zero.

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Definitions:

Proposal

A formal suggestion or plan put forward for consideration by others, especially in a professional or business context.

Report

A structured document or presentation that provides information or findings on a specific topic, often resulting from research or analysis.

Introduction

The initial section of a document or speech that sets the context, outlines the purpose, and previews the content to follow.

Strengthen

To enhance or improve the quality, force, or vigor of something.