Which of the following would cause the level of income to change by the greatest amount, ceteris paribus?

A) An increase in social security payments of $10 billion.
B) A reduction in personal income taxes of $10 billion.
C) An increase in defense spending of $10 billion.
D) The changes suggested above have equal impacts on the level of income.

ANSWER:

C) An increase in defense spending of $10 billion.