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An increase of government expenditure on goods and services by $100 billion increases both the aggregate demand and real GDP more than $100 billion. If
An increase of government expenditure on goods and services by $100 billion increases both the aggregate demand and real GDP more than $100 billion. If there is a raise of autonomous taxes by $100 billion, the aggregate demand and real GDP is decreased.
As the increase extent in aggregate demand occurred by an increase in government expenditure exceeds the decrease extent in aggregate demand occurred by an increase in autonomous taxes, the aggregate demand and the real GDP increase if the two combined.
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