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2. With that same model, what is the multiplier on +? (When I increases by I, what is the change in Y) |(= 280 +0.72 Yd I=450 16=300-0₁147 1x = 460 M=485 T = 12+0.257²

2. With that same model, what is the multiplier on +? (When I increases by I, what is the change in Y) |(= 280 +0.72 Yd I=450 16=300-0₁147 1x = 460 M=485 T = 12+0.257²

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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### Economic Model Analysis **Question:** With that same model, what is the multiplier on T? (When T increases by 1, what is the change in Y?) **Equations and Values:** - \( C = 280 + 0.72Y_d \) *Consumption Function: C represents consumption and \( Y_d \) is disposable income.* - \( I = 450 \) *Investment: I represents investment spending.* - \( G = 300 - 0.14Y \) *Government Spending: G is government expenditure influenced by total income Y.* - \( X = 460 \) *Exports: X denotes the value of exports.* - \( M = 485 \) *Imports: M stands for the value of imports.* - \( T = 12 + 0.25Y \) *Taxes: T shows the tax function with a fixed amount and a component that changes with total income Y.* ### Explanation: This set of equations is used to model an economy's consumption, investment, government spending, exports, imports, and taxes. The relationship of each component to income (Y) is crucial for determining the effects of changes in taxes (T) on national income (Y). The key task is to calculate the effect on national income (Y) due to a change in taxes (T). This involves deriving the tax multiplier, which reflects how a unit change in taxes influences the overall national income.
Transcribed Image Text:### Economic Model Analysis **Question:** With that same model, what is the multiplier on T? (When T increases by 1, what is the change in Y?) **Equations and Values:** - \( C = 280 + 0.72Y_d \) *Consumption Function: C represents consumption and \( Y_d \) is disposable income.* - \( I = 450 \) *Investment: I represents investment spending.* - \( G = 300 - 0.14Y \) *Government Spending: G is government expenditure influenced by total income Y.* - \( X = 460 \) *Exports: X denotes the value of exports.* - \( M = 485 \) *Imports: M stands for the value of imports.* - \( T = 12 + 0.25Y \) *Taxes: T shows the tax function with a fixed amount and a component that changes with total income Y.* ### Explanation: This set of equations is used to model an economy's consumption, investment, government spending, exports, imports, and taxes. The relationship of each component to income (Y) is crucial for determining the effects of changes in taxes (T) on national income (Y). The key task is to calculate the effect on national income (Y) due to a change in taxes (T). This involves deriving the tax multiplier, which reflects how a unit change in taxes influences the overall national income.
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