G part of AD identity

What does "G" represent in the AD equation?

• Government Growth
• Government Grants
• Government Spending
• Gross Domestic Product

What types of expenditures does "G" include?

• Only defense spending
• Only healthcare and education
• Consumption, investment, and transfer payments
• Consumption and investment only

How does government spending affect aggregate demand?

• It has no effect
• It decreases demand
• It increases demand
• It fluctuates unpredictably

What is an example of government spending?

• Stock market investments
• Corporate subsidies
• Building public highways
• Private sector loans

What is the multiplier effect in the context of government spending?

• Decrease in total economic output
• Constant economic output
• Increase in total economic output beyond initial spending
• Reduced government revenues

Which of the following is a fiscal policy tool?

• Interest rates
• Government spending
• Money supply
• Open market operations

How can government finance its spending?

• Only through taxation
• Only through borrowing
• Taxation, borrowing, and printing money
• Only through printing money

What might excessive government borrowing lead to?

• Lower interest rates
• Higher interest rates
• Decreased national debt
• Increased inflation

What can excessive printing of money to finance government spending lead to?

• Deflation
• Hyperinflation
• Economic stagnation
• Reduced taxation

What is one potential consequence of increased government spending?

• Reduced economic activity
• Increased private sector investment
• Crowding out of private sector investment
• Decreased unemployment benefits