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3.22. Which of the following statements is correct?

3.22. Which of the following statements is correct?

  1. [1] If government wishes to decrease the equilibrium level of income, it can increase G and leave t unchanged.
  2. [2] If government wishes to increase the equilibrium level of income, it can increase G and decrease t.
  3. [3] If government wishes to reduce the equilibrium level of income, it can decrease t.
  4. [4] If government wishes to reduce the equilibrium level of income, it can increase G.
  5. [5] If government wishes to reduce the equilibrium level of income, it can decrease G or
  6. decrease t, but it cannot do both. 

 

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