All Else Equal, Which of the Following Statements Is True

Multiple Choice

All else equal, which of the following statements is true?

A) An economy will contract when government purchases and spending from
Transfers are equal to the amount taken from the spending stream by taxes on businesses and households.
B) An economy will contract when government purchases and spending from transfers are less than the amount taken from the spending stream by taxes on businesses and households.
C) An economy will contract when government purchases and spending from transfers are greater than the amount taken from the spending stream by taxes on businesses and households.
D) The relationship between government purchases and spending from transfers and taxes has no impact on total economic activity.