In the case of the balanced budget multiplier:
A. Output increases less than the increase in government spending.
B. Output increases more than the increase in government spending.
C. Government spending and taxes are raised in equal amounts.
D. The value of the multiplier is equal to 1.
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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 2025 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.