The expansionary impact of an increase in government purchases is:
A) equal to the impact of an increase in transfer payments or a decrease in taxes by the same amount.
B) smaller than the impact of an increase in transfer payments or a decrease in taxes by the same amount.
C) greater than the impact of an increase in transfer payments or a decrease in taxes by the same amount.
D) greater than the impact of an increase in transfer payments, but smaller than the impact of a decrease in taxes by the same amount.
Correct Answer:
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