Author Question: Equal increases in government spending and taxes will: a. cancel each other out so that the ... (Read 27 times)

Mollykgkg · **on:** Jun 30, 2018

Equal increases in government spending and taxes will:
a. cancel each other out so that the equilibrium level of real GDP will remain unchanged.
b. lead to an equal decrease in the equilibrium level of real GDP.
c. lead to an equal increase in the equilibrium level of real GDP.
d. lead to an increase in the equilibrium level of real GDP real GDP that is larger than the initial change in government spending and taxes.
e. lead to an increase in the equilibrium level of output that is smaller than the initial change in government spending and taxes.

Question 2

If the money supply increases this will cause the interest rate to rise, investment to fall and GDP to fall.
a. True
b. False
Indicate whether the statement is true or false