In the above figures, supposed that there is no import or proportional tax. To pull the economy back to the long-run equilibrium, the government can cut taxes by $ trillion. 1) 4 2) 8 3) 1.33 4) 2.67 Price level (GDP deflator, 2000 = 100)16015014013012004LASADSAS81216 20 24Real GDP (trillions of 2000 dollars) Real GDP(dollars)102030405060Consumptionexpenditure (dollars)22.53037.54552.560

The tax multiplier is a measure that quantifies the change in aggregate demand resulting from a…

Answered: Price level (GDP deflator, 2000 = 100)…

Price level (GDP deflator, 2000 = 100) 160 150 140 130 120 0 A LAS AD SAS 8 12 16 20 24 Real GDP (trillions of 2000 dollars)

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Chapter1: Making Economics Decisions

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Question

In the above figures, supposed that there is no import or proportional tax. To pull the economy back to the long-run equilibrium, the government can cut taxes by $ trillion.

1.33

2.67

Price level (GDP deflator, 2000 = 100)
160
150
140
130
120
0
4
LAS
AD
SAS
8
12
16 20 24
Real GDP (trillions of 2000 dollars)

Real GDP
(dollars)
10
20
30
40
50
60
Consumption
expenditure (dollars)
22.5
30
37.5
45
52.5
60

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