If the government wants to increase equilibrium by $100 billion through a change in autonomous net taxes, it could __________ autonomous net taxes by __________.

Question

Quizplus · Accepted Answer

To increase equilibrium GDP by $100 billion through a change in autonomous net taxes, the government should decrease taxes by an amount that, when multiplied by the tax multiplier (MPC/(1-MPC)), results in a $100 billion increase in GDP.

If the Government Wants to Increase Equilibrium by $100 Billion