If both autonomous imports and autonomous taxes decrease by $100B we expect that equilibrium income will
A)increase by more than $200B.
B)decrease by more than $200B.
C)increase by $200B.
D)remain unchanged.

Question

Quizplus · Accepted Answer

A decrease in autonomous imports and autonomous taxes both effectively increase disposable income and stimulate spending, leading to a multiplier effect on the economy. This results in an increase in equilibrium income by more than the initial change due to the multiplier effect.

If Both Autonomous Imports and Autonomous Taxes Decrease by $100B