Which of the following statements is FALSE?
A) Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures.
B) Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand.
C) Taxes and transfer payments affect aggregate demand by changing disposable income.
D) An increase in disposable income leads to a decrease in aggregate demand.

Question

Quizplus · Accepted Answer

An increase in disposable income typically leads to an increase in aggregate demand, not a decrease, because people have more money to spend.

Which of the Following Statements Is FALSE