A balanced budget multiplier in the economy is defined as: (A) An increased spending is matched by increased tax rates and vice versa (B) An increased spending is matched by increased tax collections and vice versa (C) An increased spending is matched by an increased deficit financing and vice versa (D) An increased spending is matched by a decrease in tax collections and vice versa

UoH 2012 Question 9: Keynesian cross and the multiplier

A balanced budget multiplier in the economy is defined as:

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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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