Suppose taxes paid by households are raised by $100 million in order to finance an additional $100 million of government spending (assume all govt spending occurs in Canada). Explain whether there would be a net increase, decrease or no effect in the Canadian aggregate demand as a result.

Suppose taxes paid by households are raised by $100 million in order to finance an additional $100 million of government spending (assume all govt spending occurs in Canada). Explain whether there would be a net increase, decrease or no effect in the Canadian aggregate demand as a result.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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TOPIC: Crowding Out.