00:03
Hello, let's answer this question which of the following statements is true.
00:12
And there are four answers, or sorry, five, yeah, there are five different answers.
00:22
So let me write them like one, two, three, four, five, and let's look to all of them.
00:31
So the first one, an increase in government purchases by 10 million will cause real gdp to increase by exactly 10 million.
00:43
And actually it's not correct because this increase will not be exactly the same.
00:52
According to the course of macroeconomics, this answer is not correct.
00:59
The second option, consumption, investment and net export spending are all likely to change as a result of a change in government purchases.
01:14
And actually this one is correct.
01:18
When there is a change in the government purchases, it might be either increase or decrease, all these three consumption, investment, and net export spending, they can change because of the change in the government purchases.
01:38
Okay, let's look to other answer options.
01:41
The third one, most conditional forecast assume that a change in the government purchase has no effect on the other spending components of real gdp...