Can i have the word steps not only the solution? Thank you! 1.Suppose the households in a hypothetical economy has the followingconsumption functionC = 1200+ 0.85Y,dWhere Y is the disposable income. The government in this economy imposes a taxdrate of0 < t < 1 to households' income (ex. A t = 0.10 means that 10% of households'income goes to tax payments).What is the level of consumption if Y = PhP 15,000 and tax rate is at 12%?a.1b. What is the value of multiplier in this economy? (Hint: It is no longer )1-cC.What is the value of tax multiplier in this economy?.d. By how much will equilibrium income in the goods market increase if thegovernment decides to increase its purchases by PhP 13,500?Assume that the tax rate is still 12%. Can government expenditure helpincrease output in the economy?

1. Consumption function: C = 1200 + 0.85 YdC =ConsumptionYd = Disposable incomeYd = Y - TY = IncomeT…

a. What is the level of consumption if Y = PhP 15,000 and tax rate is at 12% 1 1-c b. What is the value of multiplier in this economy? (Hint: It is no longer C. What is the value of tax multiplier in this economy? d. By how much will equilibrium income in the goods market increase if the government decides to increase its purchases by PhP 13,500 ? Assume that the tax rate is still 12%. Can government expenditure help )

a. What is the level of consumption if Y = PhP 15,000 and tax rate is at 12% 1 1-c b. What is the value of multiplier in this economy? (Hint: It is no longer C. What is the value of tax multiplier in this economy? d. By how much will equilibrium income in the goods market increase if the government decides to increase its purchases by PhP 13,500 ? Assume that the tax rate is still 12%. Can government expenditure help )

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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