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What is the value of the balanced budget multiplier

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Reference no: EM131386363

We've seen that the government spending multiplier and the multiplier for changing taxes are different.  For political and macroeconomic reasons governments often run balanced budgets.  Suppose that G=T.  Then suppose that the government increases spending and taxes equally to maintain a balanced budget.  IE that:

G' = G+ delta 

T'= T+ delta 

What is the value of the balanced budget multiplier.  IE what multiple of delta does Y increase?

Reference no: EM131386363

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