A $1 increase in government spending will raise equilibrium income more than a $1 tax cut will,
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A $1 increase in government spending will raise equilibrium income more than a $1 tax cut will, yet both have the same impact on the budget deficit. So if we care about the budget deficit, the best way to stimulate the economy is through increases in spending, not cuts in taxes. Comment.
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Answer The statement accurately highlights a key concept in fiscal policy the differential impact of government spending increases versus tax cuts on ...View the full answer
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Related Book For
Principles Of Economics
ISBN: 9781292294698
13th Global Edition
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
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