If government expenditure rises by Rs. 100, total tax revenue rises by Rs. 100, the value of marginal propensity to consume is 0.5 & there is no change in autonomous investment & consumption, in a simple Keynesian closed - economy model, GDP rises by :
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Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
This question is on The balanced budget multiplier, part of Keynesian cross and the multiplier in Macroeconomics.
Why raising spending and taxes by the same amount still raises income.
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Question from the UGC-NET 2024 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.