Additional rupee of government expenditure

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For each of the following decide whether the statement is true/false or uncertain and explain why. Use diagrams wherever they are appropriate to complement your answer.

a) An additional Rupee of tax reduction has the same effect on the economy as an additional rupee of government expenditure.

b) If we want to know the inflation rate between 2019 and 2020, it makes no difference if we use a CPI with a base year of 2001 or of 2016.

c) Depreciation of the domestic currency decreases GDP by decreasing exports and increasing imports.

d) Expansionary monetary policy increases both aggregate output and the interest rate.

Reference no: EM132790217

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