Congress pushes through a balanced budget policy proposal in 2021 that increases both government spending and taxation equally by $250 billion. If the MPC in the US economy is calculated to be 0.8, then such a policy would:
A. have no effect on aggregate spending, but government debt increases by $250 billion.
B. have no effect on aggregate spending or government debt.
C. increase aggregate spending by $250 billion with no change in government debt.
D. decrease aggregate spending by $200 billion, while government debt increases by $50 billion.
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