An increase in government purchases will increase aggregate ...

[Mollykgkg]

An increase in government purchases will increase aggregate demand because
 
  A) the decline in the interest rate will increase demand.
  B) the decline in the price level will increase demand.
  C) consumption expenditures are a component of aggregate demand.
  D) government expenditures are a component of aggregate demand.

Question 2

Explain how and why an all-volunteer army may actually be cheaper than an army staffed with drafted soldiers.
 
  What will be an ideal response?

[rleezy04]

Answer to Question 1

D

Answer to Question 2

When men and women decide on their own to choose to join the military they are no doubt looking at their opportunity cost. If they elect to join they are signaling that their opportunity costs are lower compared to other choices they could have made. When people are drafted into the military their opportunity costs are not taken into account. As a result doctors, lawyers, engineers and other high-paid professional can be drafted just as easily as those in lower-paying occupations. This raises the cost to society as a whole by employing people who could be contributing economically to the country.