Which of the Following Statements Is True of Government Spending

question 35

Multiple Choice

Which of the following statements is true of government spending?

• A)An increase in government spending raises the equilibrium level of income by a multiple of the original spending increase.
• B)Government spending is a part of monetary policy, not fiscal policy.
• C)A decline in government spending brings about an expansion in the economy.
• D)Increase in government spending increases the recessionary gap in the economy.
• E)An increase in government spending shifts the aggregate demand curve downward by a fraction of the rise in government spending.

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