12.1 If a GBP 10,000,000 increase in government expenditure resulted in a GBP 14,000,000 increase in real GDP in the United Kingdom, what would have been the change in real GDP if the government had instead cut taxes by GBP 10,000,000? Note: You can assume a constant investment and real interest rate for this question.

12.1 If a GBP 10,000,000 increase in government expenditure resulted in a GBP 14,000,000 increase in real GDP in the United Kingdom, what would have been the change in real GDP if the government had instead cut taxes by GBP 10,000,000? Note: You can assume a constant investment and real interest rate for this question.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

Question

12.1 If a GBP 10,000,000 increase in government expenditure resulted in a GBP 14,000,000 increase in real GDP in the
United Kingdom, what would have been the change in real GDP if the government had instead cut taxes by GBP
10,000,000? Note: You can assume a constant investment and real interest rate for this question.
12.1 If a GBP 10,000,000 increase in government expenditure resulted in a GBP 14,000,000
increase in real GDP in the United Kingdom, what would have been the change in real GDP if
the government had instead cut taxes by GBP 10,000,000? Note: You can assume a constant
investment and real interest rate for this question.

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