If the MPC = 0.8, then a $5 billion increase in taxes and a $5 billion increase in government spending will change GDP in the following manner:

Name: If the MPC = 0.8, then a $5 billion increase in taxes and a $5 billion increase in government spending will change GDP in the following manner:
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Quizplus · Accepted Answer

The balanced budget multiplier is 1, meaning that an equal increase in government spending and taxes will increase GDP by the amount of the spending increase, which is $5 billion in this case.