U.S. government spending on goods and services:
A) can act as a temporary shock that causes short-run fluctuations.
B) can act as a policy instrument designed to mitigate short-run fluctuations.
C) represents about 20 percent of the U.S. GDP.
D) does not include transfer payments.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

U.S. government spending can indeed act as a temporary shock affecting short-run fluctuations and as a policy instrument to mitigate those fluctuations. It represents about 20% of the U.S. GDP, and it does not include transfer payments, which are redistributions of income rather than purchases of goods and services.

U.S. Government Spending on Goods and Services