A $1 increase in government spending will raise equilibrium income more than a $1 tax cut will,

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A $1 increase in government spending will raise equilibrium income more than a $1 tax cut will, yet both have the same impact on the budget deficit. So if we care about the budget deficit, the best way to stimulate the economy is through increases in spending, not cuts in taxes.

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Principles of Macroeconomics

ISBN: 978-0134078809

12th edition

Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster

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