Suppose the Government Increases Both Spending and Taxes by 100

question 56

Multiple Choice

Suppose the government increases both spending and taxes by 100. According to the balanced budget multiplier, which of the following is likely to happen?

• A) The equilibrium level of output in the economy will decrease.
• B) The marginal propensity to consume will increase.
• C) The marginal propensity to consume will decrease.
• D) The equilibrium level of output in the economy will increase.

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Definitions:

Clinical Psychology

The branch of psychology that focuses on diagnosing and treating mental, emotional, and behavioral disorders.

Ph.Ds.

Doctor of Philosophy degrees, advanced academic degrees awarded by universities to individuals who have completed a program of study and research in their specific field of study.

Clinical Psychologists

Clinical psychologists are professionals who specialize in diagnosing and treating mental, emotional, and behavioral disorders through psychological techniques and therapies.

Licensed

Officially permitted to practice or conduct a particular activity, often by having met specific qualifications or standards.