The Balanced Budget Multiplier Says That

Multiple Choice

The balanced budget multiplier says that

A) An increase in government spending paid for by a tax increase of equal size has no effect on aggregate demand.
B) An increase in government spending must be paid for by a tax cut of equal size.
C) An increase in government spending paid for by a tax increase of equal size shifts aggregate demand rightward.
D) An increase in government spending paid for by a tax increase of equal size shifts aggregate demand leftward.