Assume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed macroeconomic system, so that income equals expenditure Y=E. If we define household saving, SH, as SH=Y-T-C, where the cunsumption function is a fixed proportion of disposable income, C=c(Y-T), which of the following will be true? a. Higher government spending alongside unchanged taxation will lead to higher investment and higher household saving b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment c. Higher government spending alongside unchanged taxation will lead to higher household saving d. Higher government spending alongside unchanged taxation will lead to lower household saving
Assume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed
a. Higher government spending alongside unchanged
b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment
c. Higher government spending alongside unchanged taxation will lead to higher household saving
d. Higher government spending alongside unchanged taxation will lead to lower household saving
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