Refer to the information provided in Table 9.5 below to answer the questions that follow.
Table 9.5
All Numbers are in $ Million
-Refer to Table 9.5. 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 9.5 below to answer the questions that follow.
Table 9.5
All Numbers are in $ Million 
-Refer to Table 9.5. 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

The increase in taxes reduces disposable income, leading to a decrease in consumption and thus a decrease in equilibrium output. The multiplier effect amplifies this change, resulting in a larger decrease in output than the initial tax increase.

Refer to the Information Provided in Table 9