AP Macroeconomics Question 290: Answer and Explanation

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Question: 290

3. Which of the following events most likely increases real GDP?

  • A. An increase in the real rate of interest
  • B. An increase in taxes
  • C. A decrease in net exports
  • D. An increase in government spending
  • E. A lower value of consumer wealth

Correct Answer: D


D —An increase in GDP is the result of an increase in C, I, G , or (X - M ). All other choices represent less spending in some economic sector.