Ignoring any supply-side effects,if government expenditure on goods and services increase by $10 billion and taxes increase by $10 billion,then real GDP ________ and the price level ________.

Question

Quizplus · Accepted Answer

An increase in government expenditure directly raises aggregate demand, leading to an increase in real GDP and a rise in the price level, even if taxes increase by the same amount.

Ignoring Any Supply-Side Effects,if Government Expenditure on Goods and Services