Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) Most conditional forecasts assume that a change in government purchases has no effect on the other spending components of real GDP.
B) Only consumption spending is affected by changes in government purchases.
C) A change in government purchases has no effect on the other spending components of real GDP.
D) Consumption, investment, and net export spending are all likely to change as a result of a change in government purchases.
E) An increase in government purchases by $10 million will cause real GDP to increase by exactly $10 million.