**Question:**Which of the following statements is correct?Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded.**Options:**○ a. True○ b. False---**Detailed Explanation:**This question addresses the impact of fiscal policy on Real Gross Domestic Product (GDP). When the government increases its purchases, it directly influences aggregate demand and can raise the level of real GDP demanded. On the other hand, an increase in net taxes typically reduces disposable income for consumers, which can lead to a decrease in consumption and subsequently lower the level of real GDP demanded. Understanding how these opposing fiscal strategies affect the economy is crucial for analyzing and predicting economic conditions.

Gross Domestic Product or GDP is a statistical measure used to calculate the total money value of…

Answered: Equal increases in government purchases…

Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True O b. False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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