Which of the following would reduce GDP by the greatest amount?
A)a $20 billion increase in taxes
B)$20 billion increases in both government spending and taxes
C)$20 billion decreases in both government spending and taxes
D)a $20 billion decrease in government spending

Question

Quizplus · Accepted Answer

A $20 billion decrease in government spending directly reduces GDP by the full amount, as government spending is a component of GDP.

Which of the Following Would Reduce GDP by the Greatest