If Government Increases Taxes by the Same Amount It Increases

question 11

True/False

If government increases taxes by the same amount it increases government spending,there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households.

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Definitions:

Economize

To reduce expenses or to use resources carefully and efficiently to reduce waste and save money.

Full Production

The level of production where a company uses all its resources efficiently.

Unemployment Rate

The part of the labor force that is without employment but is actively interested in finding a job.

Full Employment

An economic situation in which all available labor resources are being used in the most economically efficient way.