3. In 2015, the Canadian government intended to adopt a balance budget act requiring the government to maintain a balanced budget at all times. Hence, if the government wishes to change government spending, it will always have to change the taxes by the same amount, that is, G = T. Does this law imply that the government can no longer use fiscal policy to affect employment and output? (Hint:

Analyze a “balanced-budget” increase in government spending, one that is accompanied by an equal tax hike.)