If the spending multiplier is 10, a $100 increase in government spending and $100 increase in taxes, what is true?
a. GDP will increase by $100
b. The government will have a balanced budget because it will spend $100, exactly the amount is collecting in revenue through an increase in tax.
c. $100 increase in government spending will lead to $1,000 increase in GDP, but at the same time, $100 increase in taxes will lead to $900 decrease in GDP (tax multiplier is -9 while spending multiplier is 10).
d. All of the above