If the federal government increases the amount of Social Security benefits for retired persons, then the
A)consumption schedule will shift upward.
B)aggregate demand curve will shift outward.
C)effect on equilibrium GDP will be the same as a cut in taxes.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Increasing Social Security benefits puts more income in the hands of retired persons, leading to higher consumption (A). This increase in consumption contributes to a rise in aggregate demand (B). The effect is similar to a tax cut, as both increase disposable income and spending (C), affecting equilibrium GDP similarly.

If the Federal Government Increases the Amount of Social Security