Solution

The equilibrium level will be adversely affected by a tax multiplier. Increased taxes have a detrimental impact on disposable income, which ultimately reduces aggregate demand. On the other hand, a rise in government spending results in a rise in overall demand.

Comparatively speaking, the economy will be affected by the expenditure multiplier rather than the tax multiplier. This demonstrates that the tax multiplier is lower in absolute terms than the multiplier for government spending.