Equilibrium output is reduced by an increase in
A)planned investment.
B)taxes.
C)government spending.
D)net exports.

Question

Quizplus · Accepted Answer

An increase in taxes would reduce disposable income, leading to a decrease in consumption spending and ultimately reducing equilibrium output. Planned investment (A) would increase output, while government spending (C) and net exports (D) would have a multiplier effect and could increase output. However, the question specifically asks for a reduction in equilibrium output, making B the best choice.

Equilibrium Output Is Reduced by an Increase in