Which of the following is true of government purchases?

A) Government purchases are independent of the price level.
B) Government purchases are independent of the level of real GDP.
C) Government purchases are independent of consumption.
D) Government purchases are independent of investment.
E) Government purchases are independent of the amount saved by households.

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keira oconnor · Accepted Answer

Final Answer : B, Explanation :  Government purchases, in the context of macroeconomic models, are typically considered as autonomous expenditures, meaning they are decided by government policy and are not directly influenced by the current level of real GDP. This is because government spending decisions are often based on policy objectives rather than the immediate state of the economy.

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