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Congress Is Debating Whether to Raise Taxes by $100 Billion

Question 154

Multiple Choice

Congress is debating whether to raise taxes by $100 billion or decrease spending by $100 billion in order to eliminate a budget deficit.Which action will have the larger effect on equilibrium GDP?


A) The increase in taxes
B) The decrease in spending
C) The effects will be equal
D) Not possible to determine without knowing the multiplier

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