When comparing a $100 billion increase in government expenditure to a $100 billion decrease in tax revenue, the effect of the increase in government expenditure on aggregate demand is
A) greater than the effect of the tax decrease.
B) equal to the effect of the tax decrease.
C) positive whereas the effect of the tax decrease is negative.
D) less than the effect of the tax decrease.
E) negative whereas the effect of the tax decrease is positive.
Correct Answer:
Verified
Q11: Q12: The tax multiplier is the Q13: To eliminate a recessionary gap, the government Q14: An increase in taxes on labor income Q15: Although --------------------initially proposes and ultimately approves the Q17: If the budget deficit is $50 billion Q18: In 2009, Congress passed tax laws to Q19: Needs-tested spending![]()
A)magnification effect of
A)decreases in recessions and increases in
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