Question 1
Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.
Refer to Figure 24.5. If the economy is in equilibrium and the government increases taxes by $50 billion, equilibrium aggregate output ________ to $________ billion.
◦ increases; 2,000
◦ decreases; 1,550
◦ decreases; 1,450
◦ decreases; 1,400
Question 2
Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.
Refer to Figure 24.5. If the economy is in equilibrium and the government increases spending by $100 billion and increases taxes by $100 billion, equilibrium aggregate output
◦ does not change.
◦ increases by $100 billion.
◦ increases by less than $100 billion.
◦ increases by more than $100 billion.
The illusory bands visible in this figure are often called Mach bands, although Mach used a ...
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