A decrease in lump-sum personal income taxes will most likely result in an increase in real GDP because which of the following occurs?
I. Government spending decreases to maintain a balanced budget.
II. Consumption spending increases because disposable personal income increases.
III. Investment spending decreases because disposable personal income increases.
(A) I only
(B) II only
(C) III only
(D) I and III only
(E) I, II and III
Answer: B
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