How Does an Increase in Government Transfer Payments Affect Aggregate

Multiple Choice

How does an increase in government transfer payments affect aggregate demand?

A) It has the same effect as a tax increase, which lowers AD with a larger multiplier than a spending decrease.
B) It has the same effect as a tax cut, which increases AD but with a smaller multiplier than a change in spending.
C) It has the same effect as a spending increase, which increases AD with a larger multiplier than a tax cut.
D) It has the same effect as a spending decrease, which increases AD with a larger multiplier than a spending decrease.