The Balanced Budget Multiplier Says That

The balanced budget multiplier says that

A) An increase in government spending paid for by a tax cut of equal size has no effect on aggregate demand.
B) An increase in government spending must be paid for by a tax cut of equal size.
C) An increase in government spending paid for by a tax cut of equal size shifts aggregate demand rightward.
D) An increase in government spending paid for by a tax cut of equal size shifts aggregate demand leftwarD.Changes in government spending are more powerful than changes in taxes or transfers.This implies that an increase in government spending seemingly "offset" with an equal rise in taxes will actually increase aggregate demand.