Refer to the information provided in Table 24.5 below to answer the question(s) that follow.
Table 24.5
All Numbers are in $ Million
-Refer to Table 24.5. Suppose the economy is in equilibrium and the government raises taxes from $200 million to $220 million, equilibrium output will ________ by $________ million.

Question

Refer to the information provided in Table 24.5 below to answer the question(s) that follow.
Table 24.5
All Numbers are in $ Million 
-Refer to Table 24.5. Suppose the economy is in equilibrium and the government raises taxes from $200 million to $220 million, equilibrium output will ________ by $________ million.

Quizplus · Accepted Answer

When taxes increase, disposable income decreases, leading to a decrease in consumption and thus a decrease in equilibrium output. The decrease in output is typically larger than the increase in taxes due to the multiplier effect.

Refer to the Information Provided in Table 24