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Ignoring Any Supply-Side Effects, If Government Expenditure on Goods and Services

Question 98

Multiple Choice

Ignoring any supply-side effects, if government expenditure on goods and services decrease by $10 billion and taxes decrease by $10 billion, then real GDP ________ and the price level ________.


A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) does not change; does not change

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