To bring about an increase in the share of GDP available for nongovernment use,
A)there will have to be a tax increase.
B)government purchases will have to decline.
C)interest rates will have to decline.
D)government purchases will have to increase.
E)interest rates will have to increase.

Question

Quizplus · Accepted Answer

If government purchases decline, it means that a smaller portion of the GDP is being used by the government. This will increase the share of GDP available for nongovernment use. A tax increase (choice A) would reduce disposable income and decrease consumption, which could lead to a decrease in GDP. Interest rates are not directly related to the share of GDP available for nongovernment use (choices C and E). Increasing government purchases (choice D) would have the opposite effect, decreasing the share of GDP available for nongovernment use.

To Bring About an Increase in the Share of GDP