Question

Economists call spending by all levels of government on final goods and services:

A) Government purchases.
B) Public spending.
C) Fiscal expenditure.
D) Government expenditure.

Answer 1

The correct option is A). Economists term spending by all levels of government on final goods and services as 'government purchases,' which includes federal, state, and local government expenditures on items and services, excluding transfer payments like Social Security.

Step-by-step explanation:

Economists refer to government spending on final goods and services as government purchases. This term encompasses expenditures by federal, state, and local governments on items such as office supplies, military equipment, and infrastructure projects like highways and bridges. Transfer payments, such as Social Security or unemployment benefits, are not considered government purchases, because they do not involve an exchange for a new good or service. Instead, these are income transfers from taxpayers to others and are thus excluded from government purchases as counted in GDP calculations.