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Unformatted text preview: government intends to spend more and increase the size of the aggregate or effective demand. This can be done by raising fresh debts to finance extra expenditure. Alternatively, the tax rates can also be reduced in order to enable people to spend more. The case of surplus budget is exactly the opposite. Here, public revenue exceeds public expenditure. It then becomes possible for the government to repay some debt burden . It is also possible to raise tax rates and to withdraw some purchasing power from circulation....
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- Fall '10