An economy will expand when spending from:
A) transfers and borrowing, and saving and taxes all increase.
B) transfers and borrowing, and saving and taxes all decrease.
C) transfers and borrowing increases, and saving and taxes decrease.
D) transfers and borrowing decreases, and savings and taxes increase.

Question

Quizplus · Accepted Answer

An economy expands when there is an increase in spending. Increasing transfers and borrowing directly injects more money into the economy, encouraging spending. Decreasing savings means more immediate consumption or investment, and decreasing taxes leave individuals and businesses with more disposable income to spend, further stimulating economic activity.

An Economy Will Expand When Spending From