Which of the following best explains why equilibrium income will rise by more than $100 in response to a $100 increase in government spending?
(A) Incomes will rise, resulting in a tax decrease.
(B) Incomes will rise, resulting in higher consumption.
(C) The increased spending raises the aggregates price level.
(D) The increased spending increases the money supply, lowering interest rates.
(E) The higher budget deficit reduces investment.
Answer: B
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