The balanced budget multiplier is equal to A)1 B)1 ÷ (1 - MPC) C)1 ÷ (1 - MPS) D)zero E)Y - Y^*

Name: The balanced budget multiplier is equal to A)1 B)1 ÷ (1 - MPC) C)1 ÷ (1 - MPS) D)zero E)Y - Y *
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The balanced budget multiplier is equal to 1 because an equal increase in government spending and taxes leads to an equivalent increase in aggregate demand, assuming the marginal propensity to consume (MPC) is less than 1.

The Balanced Budget Multiplier Is Equal to