If the government increases payments to dairy farmers for their excess supply:

Question

Quizplus · Accepted Answer

Increasing payments to dairy farmers would increase their income, which would lead to an increase in their spending. This increase in spending would then increase demand for goods and services, leading to an increase in aggregate demand. Therefore, the correct choice is B. A is not true, as there is no direct relationship between dairy farm payments and interest rates. C is not true, as increasing payments to dairy farmers would be expansionary fiscal policy, not contractionary. D is not true, as stated above.

If the Government Increases Payments to Dairy Farmers for Their