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Economics

When comparing a $100 billion increase in government purchases to a $100 billion decrease in tax revenue, the effect of the increase in government purchases on aggregate demand is

A. greater than the effect of the tax decrease because households save a portion of their tax decrease.

B. equal to the effect of the tax decrease since both government purchases and taxation are fiscal policy instruments.

C. less than the effect of the tax decrease because of the time lag involved in obtaining funding for government purchases.

D. positive whereas the effect of the tax decrease is negative.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91928363

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