Answer to Question #319824 in Macroeconomics for Buhle

Question

How much does the government collect in taxes when Economy is in equilibrium

Answer 1

If the same amount raises both taxes and government expenditure, the eventual change in equilibrium output equals the rise in government spending.

The government utilizes these subsidies to stimulate the development of items or services that it sees as a consumer necessity or crucial to society. Support causes the supply curve to move to the right, lowering the equilibrium price while increasing the equilibrium quantity.