Consider a Simple Macro Model with a Constant Price Level

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________.

A) the net taxes; the government purchases of goods and services
B) the net taxes; its effect on disposable income
C) the government purchases of goods and services; its effect on net exports
D) the government purchases of goods and services; its effect on disposable income
E) the government purchases of goods and services; its effect on investment