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How Does the Spending Multiplier Compare Between a $1,000 Increase

Question 121

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How does the spending multiplier compare between a $1,000 increase in government spending and a $1,000 decrease in taxes collected?


A) An increase in government spending has a greater spending multiplier than an equivalent tax decrease.
B) An increase in government spending has a smaller spending multiplier than an equivalent tax decrease.
C) An increase in government spending has the same spending multiplier as an equivalent tax decrease.
D) Neither an increase in government spending nor a decrease in taxes generates any multiplier at all.

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