Question

What would be the net effect of the government increasing the taxes by $10 billion at the same time that it decreased spending by $5 billion? Assume a marginal propensity to save of 0.1.
Decreasing aggregate demand by $40 billion
Decreasing aggregate demand by $140 billion
Increasing aggregate demand by $40 billion
Increasing aggregate demand by $140 billion
The impact on aggregate demand is indeterminate.

Answer 1

Answer:

a

Explanation: