Assume that C = 150 + 0.9Y and I = 50. The balanced budget multiplier is:

Question

Quizplus · Accepted Answer

The balanced budget multiplier is equal to 1, which means that any increase in government spending will increase GDP by the same amount, and any decrease in government spending will decrease GDP by the same amount. In this case, since government spending is not given, assuming that government spending is balanced, any change in government spending will not affect GDP. Therefore, the balanced budget multiplier is 1.

Assume That C = 150 + 0