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In the aggregate expenditures model, we note that an increase in government purchases G and an increase in lump-sum taxes T of the same amount will have:Different effects on GDP, with the change in T having a larger impact than the change in GEssentially the same effect on equilibrium GDP, both in magnitude and in directionDifferent effects on GDP, with the change in G having a larger impact than the change in TThe same magnitudes of impact on equilibrium GDP, though in opposite directions

Respuesta :

The amount and direction of the influence on equilibrium GDP are essentially the same. same impact sizes on equilibrium GDP, but in opposing directions.

The balanced-budget multiplier, which is equal to 1, can be summed up as follows: if government expenditure and taxation are increased by the same amount, so will output.

Increases in exports or decreases in imports cause an increase in aggregate expenditure, which drives the economy toward a higher equilibrium and raises GDP potential. This equilibrium is reached when consumption, investment, or government expenditures all grow.

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