What can we predict about the effect on consumption of an increase in government spending?
A. Consumption will increase by the amount of the government spending.
B. Consumption will increase by an amount equal to the MPC times the change in real GDP.
C. Consumption will not rise as government spending rises.
D. Consumption will increase by an amount equal to the MPC times the change in government spending.
Answer: B
Economics
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Which of the following will the Federal Reserve do to decrease the money supply?
a. Decrease the salaries of government employees. b. Sell government bonds. c. Buy government bonds. d. Raise taxes. e. Sell corporate bonds.
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Which of the following is a transfer payment? I. Social Security II. Unemployment benefits
A) I only B) II only C) Both I and II D) Neither I nor II
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