Equal increases in government spending andtaxes willa. cancel each other out so that the equilibriumlevel of real GDP remains unchanged.b. lead to an equal decrease in the equilibriumlevel of real GDP.c. lead to an equal increase in the equilibriumlevel of real GDP.d. lead to an increase in the equilibrium levelof real GDP output that is larger than theinitial change in government spendingand taxes. EXHIBIT 11 National Income DataAmount(billions of dollars)Corporate profits$ 305Depreciation479Gross private domesticinvestment716Personal taxes565Personal saving120Government spending924Imports547Net interest337Compensation of employees2,648Rental income19Exports427Personal consumptionexpenditures2,966Indirect business taxes370Contributions for SocialSecurity (FICA)394Transfer payments andother income967Proprietors' income328

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Answered: EXHIBIT 11 National Income Data Amount…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Equal increases in government spending and
taxes will
a. cancel each other out so that the equilibrium
level of real GDP remains unchanged.
b. lead to an equal decrease in the equilibrium
level of real GDP.
c. lead to an equal increase in the equilibrium
level of real GDP.
d. lead to an increase in the equilibrium level
of real GDP output that is larger than the
initial change in government spending
and taxes.

EXHIBIT 11 National Income Data
Amount
(billions of dollars)
Corporate profits
$ 305
Depreciation
479
Gross private domestic
investment
716
Personal taxes
565
Personal saving
120
Government spending
924
Imports
547
Net interest
337
Compensation of employees
2,648
Rental income
19
Exports
427
Personal consumption
expenditures
2,966
Indirect business taxes
370
Contributions for Social
Security (FICA)
394
Transfer payments and
other income
967
Proprietors' income
328

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