Show as to how the imposition of a tax, given the level of government expenditure, causes a reduction in the equilibrium level of income in a three sector economy. Th e contractionary eff ect of...

Show as to how the imposition of a tax, given the level of government expenditure, causes a reduction in the equilibrium level of income in a three sector economy.

Th e contractionary eff ect of taxes is less than the expansionary eff ect of government expenditure on the income level

even though G T. Explain.