The level of economic activity would increase if government purchases of goods and services increased:
A) and income tax payments decreased.
B) by more than income tax payments increased.
C) by exactly as much as income tax payments increased.
D) all of the above.

Question

Quizplus · Accepted Answer

All the options describe scenarios where government action either injects more money into the economy or leaves the net spending power of the populace unchanged, which would likely increase the level of economic activity.

The Level of Economic Activity Would Increase If Government Purchases