Practice Questions
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What is the impact of a balanced budget increase in government spending on short-run economic fluctuations?
When the government spends more money, it can help businesses and people earn more. Other options are incorrect because Some might think that more spe...
What is the effect of a balanced budget fiscal stimulus on the economy in terms of the multiplier effect?
A balanced budget fiscal stimulus means the government spends money while also raising the same amount in taxes. Other options are incorrect because S...
How does the balanced budget multiplier affect economic equilibrium when government spending increases by the same amount as taxes?
When the government spends money, it creates demand for goods and services. Other options are incorrect because Some might think that spending less ov...
In the context of Keynesian economics, how does a balanced budget affect the overall economy when considering the balanced budget multiplier effect?
When the government spends money, it puts more cash into the economy. Other options are incorrect because Some might think that spending less means le...
How does an increase in government spending funded by a balanced budget affect the economy when considering the marginal propensity to consume, and how does this differ from a budget deficit scenario?
When the government spends more money without borrowing, it has a smaller effect on the economy. Other options are incorrect because Some might think ...
What is the effect of a balanced budget on the economy according to the balanced budget multiplier concept?
When the government spends money and balances its budget, it can boost the economy. Other options are incorrect because Some might think that balanced...
What is the primary effect of a balanced budget increase on aggregate demand in the economy?
When the government spends more money, it directly boosts demand. Other options are incorrect because Some might think that spending doesn't change de...
What is the effect of a balanced budget on aggregate demand in an economy?
When the government spends money, it can boost the economy. Other options are incorrect because Some think higher taxes mean less demand; It's a commo...
Arrange the following steps in the correct order to understand the effect of a balanced budget increase on the economy: A) Government increases spending and taxes by the same amount; B) Aggregate demand is stimulated; C) Real output increases; D) Economic growth is achieved.
When the government spends more and raises taxes by the same amount, it boosts overall demand. Other options are incorrect because This order suggests...
Which of the following statements accurately describe the effects of a balanced budget multiplier? Select all that apply.
Other options are incorrect because This idea suggests that when the government spends more, taxes must go down; This statement implies that raising b...
Government spending increases:Tax increases :: Increased aggregate demand: ?
When the government spends more money, it helps create jobs. Other options are incorrect because Some might think that spending less means less tax mo...
A government decides to increase its spending by $100 million while simultaneously increasing taxes by $100 million. Based on the balanced budget multiplier effects, which of the following outcomes is most accurate regarding the overall impact on economic output?
When the government spends money, it creates jobs and boosts the economy. Other options are incorrect because Some might think that raising taxes will...
If the government increases both spending and taxes by the same amount, why might the overall economic output increase despite the tax increase?
When the government spends money, it creates jobs and boosts demand. Other options are incorrect because People often think that higher taxes mean the...
If the government increases both spending and taxes equally, what is the likely impact on aggregate demand?
When the government spends more, it puts money into the economy. Other options are incorrect because Some might think that equal increases in spending...
If the government increases spending and taxes by the same amount, what is the likely impact on overall economic output?
When the government spends money, it creates jobs and boosts demand. Other options are incorrect because Some might think that higher taxes always hur...
When the government increases both spending and taxes by the same amount, the overall change in economic output is determined by the _____, which is typically greater than the tax multiplier.
The spending multiplier shows how much economic output increases when the government spends money. Other options are incorrect because Some might thin...
A local government plans to increase its spending on public infrastructure by $1 million while simultaneously increasing local taxes by $1 million. Based on the balanced budget multiplier concept, what is the likely impact on the local economy's output?
When the government spends money, it creates jobs and boosts local businesses. Other options are incorrect because Some might think that raising taxes...
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