Taxes to affect real output and the price level

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Governments sometimes try to change government spending or taxes to affect real output and the price level.

A. If the government wants to use either government spending or taxes paid by households to increase aggregate demand, how should G change and how should T change?

B. If the government wants to use either government spending or taxes paid by households to decrease aggregate demand, how should G change and how should T change?

Reference no: EM131096475

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