by equa a. Suppose the government increases both taxes (7) and government purchase (Y) is fixed by the factors of production, the change in national saving (AS) will be O(MPC-1)×AT. O(1-MPC) x AT. b. The larger is the MPC (the closer it is to 1), the will be the increase in the interest rate. will be the decline in investment, and the
by equa a. Suppose the government increases both taxes (7) and government purchase (Y) is fixed by the factors of production, the change in national saving (AS) will be O(MPC-1)×AT. O(1-MPC) x AT. b. The larger is the MPC (the closer it is to 1), the will be the increase in the interest rate. will be the decline in investment, and the
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
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![a. Suppose the government increases both taxes (7) and government purchases (G) by equal amounts. Assuming income
(Y) is fixed by the factors of production, the change in national saving (AS) will be
(MPC-1) * AT.
(1-MPC) x AT.
b. The larger is the MPC (the closer it is to 1), the
will be the increase in the interest rate.
will be the decline in investment, and the](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6432dfce-8649-42dd-95b4-a18a04ece3e7%2F3aa9e72b-0046-4757-9503-d34f7050ef11%2Fpsae8qj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:a. Suppose the government increases both taxes (7) and government purchases (G) by equal amounts. Assuming income
(Y) is fixed by the factors of production, the change in national saving (AS) will be
(MPC-1) * AT.
(1-MPC) x AT.
b. The larger is the MPC (the closer it is to 1), the
will be the increase in the interest rate.
will be the decline in investment, and the
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