Everything else equal, which will have a bigger effect on aggregate demand and gdp: a $100 million reduction in taxes, or a $100 million increase in government spending?
a. the increase in government spending, which must go through consumption to affect gdp, will have a bigger effect than the decrease in taxes, which affects gdp and income directly.
b. the increase in government spending, which has shorter lags, will have a bigger effect than the decrease in taxes, which must go through government lags.
c. the decrease in taxes, which affects gdp and income directly, will have a bigger effect than the increase in government spending, which must go through consumption to affect gdp.
d. the increase in government spending, which affects gdp and income directly, will have a bigger effect than the decrease in taxes, which must go through consumption to affect gdp.
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Everything else equal, which will have a bigger effect on aggregate demand and gdp: a $100 million...
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