Assume the consumption function is C = 200+ (0.8) YD and the income tax rate is t = 0.25. What will be the effect of an increase in government transfers by \ Delta TR 100 on the full employment budget surplus? how do I arrive at correct answer of decrease of 100

Assume the consumption function is C = 200+ (0.8) YD and the income tax rate is t = 0.25. What will be the effect of an increase in government transfers by \ Delta TR 100 on the full employment budget surplus? how do I arrive at correct answer of decrease of 100

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hi great expert Hand written solution is not allowed.

Assume the consumption function is C = 200+ (0.8)
YD and the income tax rate is t = 0.25. What will be
the effect of an increase in government transfers by\
Delta TR 100 on the full - employment budget
surplus? how do I arrive at correct answer of decrease
of 100

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Step 1: Explain Budget surplus, Disposable Income (YD)

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