Suppose that the government decreases its autonomous spending by $100 billion and also decreases its autonomous taxes by $100 billion. How would this affect the economy? Question 2 options: No effect on the level of GDP
Suppose that the government decreases its autonomous spending by $100 billion and also decreases its autonomous taxes by $100 billion. How would this affect the economy? Question 2 options: No effect on the level of GDP
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.6P
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My dear please not hand written.
Explanation of the correct option and explanation of the incorrect options.
![Suppose that the government decreases its autonomous
spending by $100 billion and also decreases its
autonomous taxes by $100 billion. How would this affect
the economy?
Question 2 options:
No effect on the level of GDP
GDP may rise or fall depending on the size of the mpc
GDP will rise
GDP will fall](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd99d6fb4-e0f4-42ff-a7c1-54866e7050bb%2F33e73e98-01af-4721-b893-e0f0f28aff8a%2Fphovblf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that the government decreases its autonomous
spending by $100 billion and also decreases its
autonomous taxes by $100 billion. How would this affect
the economy?
Question 2 options:
No effect on the level of GDP
GDP may rise or fall depending on the size of the mpc
GDP will rise
GDP will fall
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