Question

if government purchases were to decrease by​ $300 billion or if taxes were increased by​ $300 billion, the equilibrium level of real gdp would decrease by

Answer 1

Answer: more than $300 billion.

Step-by-step explanation:

Therefore, as per the multiplier effect, if the government's purchasing worth $ 300 billion were decreased, or taxes were increased by $300 billion, it will directly impact the equilibrium level of real GDP and would decrease by more than $300 billion.