Suppose Policy Makers Pass a Budget That Results in a Reduction

question 251

Multiple Choice

Suppose policy makers pass a budget that results in a reduction in government spending and no change in taxes. This reduction in government spending will likely

• A) increase government borrowing and increase interest rates.
• B) generate extra tax revenues to cover the extra spending.
• C) reduce interest rates and increase planned investment.
• D) reduce interest rates, increase in planned investment, and increase real GDP.

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Definitions:

Laissez-Faire Leader

A leadership style characterized by minimal supervision, where followers are given a high degree of freedom in their decision-making processes.

Situational Leadership Model

A leadership theory proposing that the most effective leadership style varies according to the situation and the maturity level of the followers.

Delegating Leader

A leader who assigns responsibility and authority to others, enabling them to make decisions.

Transformation Approach

A leadership perspective focusing on the connections and interactions between leaders and followers to raise each other to higher levels of motivation and morality.