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Author Question: If government increases taxes by the same amount it increases government spending, there will be no ... (Read 107 times)

Diane

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on: Jun 29, 2018
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.
 
  Indicate whether the statement is true or false

Question 2

Suppose you withdraw 1,000 in cash from your checking account. Draw a T-account to show the effect of this transaction on your bank's balance sheet.
 
  What will be an ideal response?


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xMRAZ

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Reply #1 on: Jun 29, 2018
Answer to Question 1

FALSE

Answer to Question 2

The withdrawal of 1,000 from your checking account will reduce the bank's checking account deposits and reserves by 1,000.

Assets Liabilities
Reserves -1,000 Deposits -1,000


Diane

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

scikid

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Reply 3 on: Yesterday
Wow, this really help

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