Which of the following would cause the level of income to change by the greatest amount, ceteris paribus?
A. An increase in social security payments of $10 billion.
B. A reduction in personal income taxes of $10 billion.
C. An increase in defense spending of $10 billion.
D. The changes suggested above have equal impacts on the level of income.
Answer:C
Which of the following would cause the level of income to change by the greatest amount, ceteris paribus?
A. An increase in social security payments of $10 billion. B. A reduction in personal income taxes of $10 billion. C. An increase in defense spending of $10 billion. D. The changes suggested above have equal impacts on the level of income.