Question

Changes in government purchases affect planned spending (directly, indirectly, not at all)______________ while changes in taxes and transfers affect plannet spending (directly, indirectly, not at all) and changes in taxes and/or transfers affect planned spending____

Answer 1

Changes in government purchase affect planned spending directly. They change autonomous, self directed expenditures and costs, and so the planned spending is also changed. Changes in taxes and or transfers affect planned spending indirectly. They do this by changing disposable income, and people consume more or less as a result.