Other things constant,a decrease in real GDP demanded is caused by a(n)
A)increase in government purchases
B)increase in transfer payments
C)decrease in government purchases
D)decrease in net taxes
E)All of the answers are correct

Question

Quizplus · Accepted Answer

A decrease in real GDP demanded is caused by a decrease in government purchases as this represents a decrease in government spending which reduces overall demand in the economy. Choices A, B, and D would all have an expansionary effect on the economy and increase real GDP demanded. Therefore, option C is the only choice that would cause a decrease in real GDP demanded.

Other Things Constant,a Decrease in Real GDP Demanded Is Caused