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A $100 Million Decrease in Government Expenditure on Goods and Services

Question 90

Multiple Choice

A $100 million decrease in government expenditure on goods and services leads to an even larger decrease in aggregate demand because of


A) induced changes in consumption expenditures.
B) automatic fiscal policy.
C) induced changes in aggregate supply.
D) discretionary fiscal policy.
E) the reinforcing effect of monetary policy.

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