In the simple macro model,how do government transfer payments to individuals affect desired aggregate expenditure?
A)directly
B)through the consumption function
C)through business investment
D)through net exports
E)through the government's budget deficit

Question

Quizplus · Accepted Answer

Government transfer payments to individuals directly affect desired aggregate expenditure through the consumption function. Transfer payments increase disposable income and therefore increase consumption spending, which is a component of aggregate expenditure.

In the Simple Macro Model,how Do Government Transfer Payments to Individuals