An increase in government spending
A) increases taxes and reduces the marginal propensity to consume.
B) increases taxes and reduces lifetime wealth of consumers.
C) reduces taxes and reduces lifetime wealth of consumers.
D) increases taxes and increases the marginal propensity to consume.
E) does not affect the present value of taxes, thus does not affect the lifetime wealth of consumers.

Question

Quizplus · Accepted Answer

The Answer of An increase in government spending
A) increases taxes and reduces the marginal propensity to consume.
B) increases taxes and reduces lifetime wealth of consumers.
C) reduces taxes and reduces lifetime wealth of consumers.
D) increases taxes and increases the marginal propensity to consume.
E) does not affect the present value of taxes, thus does not affect the lifetime wealth of consumers.

An Increase in Government Spending