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Earn +20 ptsQ: A decrease in government spending will cause a?
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Why is it difficult for the federal government to increase or decrease spending?
Because two thirds of all government spending is on entitlements which the government connot easily alter. (by Solomon Zelman)
How does a decrease in government spending impact aggregate demand?
A decrease in government spending reduces the overall demand for goods and services in the economy, leading to a decrease in aggregate demand. This can result in lower economic growth and potentially lead to a recession.
When would the government most likely decrease its spending?
. When unemployment has decreased
What factors contribute to the decrease of both M1 and M2 money supplies?
Factors that contribute to the decrease of both M1 and M2 money supplies include a decrease in bank lending, a decrease in consumer spending, a decrease in government spending, and an increase in the demand for cash holdings.
When would an increase in government purchases be an appropriate countercyclical fiscal policy?
A decrease in government spending and increase in taxes.
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