When the Public Sector Is Added to the Aggregate Expenditures

question 177

Multiple Choice

When the public sector is added to the aggregate expenditures model:

• A)the equilibrium condition becomes G + S = T + I_g + X.
• B)the equilibrium condition becomes G + T = S + I_g + X.
• C)the equilibrium condition becomes C_a + I_g + X_n + G + T = GDP.
• D)we add a new leakage in the form of taxes and a new injection in the form of government spending.

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