Which of the following statements is incorrect?
A) Given the economy's MPS,a $15 billion reduction in government spending will reduce the equilibrium GDP by more than would a $15 billion increase in taxes.
B) Other things unchanged,a tax reduction of $10 billion will increase the equilibrium GDP by $25 billion when the MPS is .4.
C) If the MPC is .8 and GDP has declined by $40 billion,this was caused by a decline in aggregate expenditures of $8 billion.
D) A government surplus is anti-inflationary;a government deficit is expansionary.
Correct Answer:
Verified
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