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December 18, 2014

Homework Help: Economics

Posted by Amy on Sunday, November 5, 2006 at 11:16pm.

If a government raises its expenditures by $50 billion and at the same time levies a lump-sum tax of $50 billion, the net effect on the economy will be to:
a. increase GDP by less than $50 billion
b. increase GDP by more than $50 billion
c. increase GDP by $50 billion
d. make no change in GDP

Take a shot. Remember the difference between a taxation multiplier and a government spending multiplier.

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