In the Keynesian-Cross Model, If Taxes Are Reduced by 250

question 71

Multiple Choice

In the Keynesian-cross model, if taxes are reduced by 250, then the equilibrium level of income:

• A) increases by 250.
• B) increases by more than 250.
• C) decreases by 250.
• D) increases, but by less than 250.

---

Definitions:

Surplus II

An excess of production or supply over demand, leading to potential wastage or decrease in prices.

Total Surplus

The total benefits society gains, encompassed by the addition of consumer surplus and producer surplus within a market.

Consumer Surplus

The variation between the sum consumers are willing to allocate for a good or service and the sum they actually allocate.

Surplus II

An additional amount of a resource, product, or service that exceeds the amount demanded or utilized.