In a country without foreign trade and income taxes,if the government decreases autonomous spending and autonomous taxes by 50 then total expenditures and output will

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Quizplus · Accepted Answer

Decreasing autonomous spending and autonomous taxes by the same amount will lead to a decrease in total expenditures and output, as the multiplier effect of government spending is typically larger than that of tax cuts, especially when the marginal propensity to save (MPS) is greater than zero. This is because a portion of the tax cut is saved rather than spent, reducing the overall impact on output.

In a Country Without Foreign Trade and Income Taxes,if the Government