Figure 3-2

-Refer to the information above.What will be the equilibrium level of GDP if taxes are reduced by 10?
A)460
B)470
C)510
D)520

Question

Figure 3-2
 
-Refer to the information above.What will be the equilibrium level of GDP if taxes are reduced by 10?
A)460 
B)470 
C)510 
D)520

Quizplus · Accepted Answer

A reduction in taxes increases disposable income, leading to an increase in consumption and thus an increase in the equilibrium level of GDP. However, without specific information on the marginal propensity to consume, tax multiplier, or the initial level of taxes and GDP, it's not possible to calculate the exact change in GDP. Therefore, the correct answer cannot be determined from the provided options.

Figure 3-2 -Refer to the Information Above.What Will Be the Equilibrium Level