An increase in taxes will ________ consumption spending, and a decrease in transfer payments will ________ consumption spending.
A) decrease; increase B) decrease; decrease C) increase; decrease D) increase; increase
Question 2
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
A) 5 higher in year 2 than in year 1. B) 105 higher in year 1 than in year 2.
C) 105 higher in year 2 than in year 1. D) 5 higher in year 1 than in year 2.
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