Changes in government purchases affect planned spending ________, and changes in taxes and/or transfers affect planned spending ________.
A)directly; directly
B)directly; indirectly
C)directly; not at all
D)indirectly; indirectly

Question

Quizplus · Accepted Answer

Changes in government purchases affect planned spending directly because the purchases are part of aggregate expenditure. Changes in taxes and/or transfers indirectly affect spending because they inspire households to make changes to their planned expenditures as disposable income changes.

Changes in Government Purchases Affect Planned Spending ________, and Changes