# Answer to Question #64983 in Economics of Enterprise for mo

Question #64983

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:

\begin{align*}

G^{'}&=G+\Delta\\

T^{'}&=T+\Delta

\end{align*}

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

https://fred.stlouisfed.org/series/GDPC1

https://fred.stlouisfed.org/series/UNRATE

\begin{align*}

G^{'}&=G+\Delta\\

T^{'}&=T+\Delta

\end{align*}

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

https://fred.stlouisfed.org/series/GDPC1

https://fred.stlouisfed.org/series/UNRATE

Expert's answer

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