The immediate effect on GDP of Ibrahim's purchase of a government bond is
A)a decrease in consumption because Ibrahim has less money to spend
B)an increase in government spending
C)an increase in investment
D)a decrease in investment because less money is available to him for further investment
E)nonexistent,since no real goods and services have been produced

Question

Quizplus · Accepted Answer

Purchasing a government bond is a financial transaction and does not directly involve the production of goods or services, so it does not immediately affect GDP.

The Immediate Effect on GDP of Ibrahim's Purchase of a Government