Refer to the information provided in Table 9.8 below to answer the questions that follow.
Table 9.8
All Figures in Billions of Dollars

-Refer to Table 9.8. The economy is at the equilibrium level of output. If government spending decreases by $50 billion, the new equilibrium level of output is

Question

Refer to the information provided in Table 9.8 below to answer the questions that follow.
Table 9.8
All Figures in Billions of Dollars
 
-Refer to Table 9.8. The economy is at the equilibrium level of output. If government spending decreases by $50 billion, the new equilibrium level of output is

Quizplus · Accepted Answer

A decrease in government spending would lead to a multiplier effect on the overall economy. Without the specifics of the multiplier or the initial equilibrium level from Table 9.8, we typically assume that a decrease in government spending reduces the overall level of output. Given the options, $3,100 billion suggests a reduction from a higher initial level, aligning with how fiscal policy impacts aggregate demand and thus the equilibrium level of output.

Refer to the Information Provided in Table 9