What is the effect of a balanced budget on aggregate demand in an economy?

A balanced budget means that the government spends the same amount of money as it collects in taxes, so there is no deficit or surplus. When the government increases its spending while also raising taxes to keep the budget balanced, it can still boost overall demand in the economy. This happens because the money the government spends can create jobs and stimulate businesses, leading to more people earning money and spending it on goods and services. For example, if a government builds a new school, it might hire workers and buy materials, which helps local businesses and encourages families to spend more. Therefore, even though the budget is balanced, this spending can increase aggregate demand and help the economy grow.