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:

Balance Sheet

A financial statement that shows a firm’s assets, liabilities, and owner’s equity.

Income Statement

A financial statement that shows the revenue and expenses of a firm, allowing you to calculate the profit or loss produced in a specific period of time.

GAAP

Generally Accepted Accounting Principles; a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.

Accounting Standards

Formal guidelines and principles designed to improve the transparency and consistency of financial reporting and accounting practices.