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One of the debates surrounding changes in government spending is its effect on the size of national income. Separate ADIAS diagrams illustrate the following

One of the debates surrounding changes in government spending is its effect on the size of national income. Separate ADIAS diagrams illustrate the following scenarios: (i) an increase in government spending which is entirely crowded out; (ii) an increase in government spending which increases business confidence and induces a rise in investment expenditure.

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