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Suppose That a $10 Billion Increase in Government Spending Increases

Question 3

Multiple Choice

Suppose that a $10 billion increase in government spending increases Real GDP by $50 billion,and that a $12 billion tax reduction increases Real GDP by $54 billion.In this situation,the tax multiplier is _______________ the government spending multiplier.


A) less than
B) greater than
C) equal to
D) none of the above

Correct Answer:

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