ALL Transfer Payments FRQ's
2011B AP Macroeconomics Exam
(A.) Economy is in Long-run Equilibrium, draw a graph
(B.) Consumer confidence falls.
Consumer confidence falls means that consumers are worried about the economy and therefore will spend less consumption (C) decreases and AD decreases |
Transfer payments are payments for things like
Welfare Benefits = payments to poorer citizens
Unemployment benefits = payments to citizens who have become unemployed
both of these increase when the country slides into a recession
More transfer payments implies the government must pay for these
so Government Spending increases