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The president wishes to increase spending for education by 54 billion but also maintain a balanced budget. Therefore, taxes w
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Answer #1

Solution: It will increase

Explanation: An equal increase in government spending for education and taxes will increase the income and also the aggregate demand increases. The income increases with the amount of government purchases, which is positive, thus causing an increase in aggregate demand; however the extent of an increase will be depending on the spending and tax multipliers.

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