If congress votes to increase spending and taxes by the same amount, what is the effect on employment and interest rates?

employment / interest rates
increase / increase
increase / decrease
increase / no change
decrease / decrease
decrease / no change

Increase/Decrease

Explanation:

It can be explained as, when the government increases its spending, it means that 'G' is increasing and 'G' is one of the factors for calculating the GDP.

Since GDP will increase due to increase in spending, the growth will also increase, ultimately resulting in the increase in employment opportunities.

Secondly, Increased taxes means that there is less disposable income for the consumer, which will result in less demand for products, loans etc, hence there will be a decrease in the interest rates as well due to the decrease in demand for loans.

Hope this helps you out with your concept.