If government spending in a country declines by $10 billion and, at the same time, taxes increase by an equal amount, what is the total effect in the economy?
a. Equilibrium real GDP increases
b. Equilibrium real GDP increases by $20 billion
c. Equilibrium real GDP is unchanged
d. Equilibrium real GDP decreases by more than $10 billion and less than $20 billion
e. Equilibrium real GDP decreases by more than $20 billion
d
Economics
You might also like to view...
The textbook points out that rent controls have
A) benefited upper-income or existing tenants. B) had no effect on the market for housing. C) greatly benefited the homeless. D) attracted increases in low-income housing.
Economics
The Washington Consensus argued that transition should begin with
a. The creation of macroeconomic stability b. A free floating exchange rate c. De-privatization d. All of the above e. None of the above
Economics