An Increase in Government Spending Raises Income

question 25

Multiple Choice

An increase in government spending raises income:

• A) and the interest rate in the short run, but leaves both unchanged in the long run.
• B) in the short run, but leaves it unchanged in the long run, while lowering investment.
• C) in the short run, but leaves it unchanged in the long run, while lowering consumption.
• D) and the interest rate in both the short and long runs.

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Definitions:

Children Under 6

Young individuals who have not yet reached their sixth birthday, focusing on early childhood development and care.

Nonfamily Households

Living arrangements consisting of individuals who live alone or with non-relatives, differing from family households which include related individuals.

Increased

Marked by growth or a rise in quantity, intensity, or level of particular phenomena or metrics.

Decreased

To become smaller or less in size, amount, intensity, or degree.