In the Aggregate Expenditures Model, We Note That an Increase

question 134

Multiple Choice

In the aggregate expenditures model, we note that an increase in government purchases G and an increase in lump-sum taxes T of the same amount will have:

• A) The same magnitudes of impact on equilibrium GDP, though in opposite directions
• B) Different effects on GDP, with the change in G having a larger impact than the change in T
• C) Different effects on GDP, with the change in T having a larger impact than the change in G
• D) Essentially the same effect on equilibrium GDP, both in magnitude and in direction

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