Government spending is more employment

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Reference no: EM131392812

A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:

1) government spending is more employment-intensive than is either consumption or investment spending.

2) taxes vary directly with income.

3) government spending increases the money supply and a tax reduction does not.

4) a portion of a tax cut will be saved.

Reference no: EM131392812

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