Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who have low marginal propensities to consume, and Type B, who have high marginal propensities to consume. In Model 2, there are only Type A consumers. Then, a decrease in the exogenous taxes would lead to higher output in Model 2 than in Model 1
Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who have low marginal propensities to consume, and Type B, who have high marginal propensities to consume. In Model 2, there are only Type A consumers. Then, a decrease in the exogenous taxes would lead to higher output in Model 2 than in Model 1
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy
Section: Chapter Questions
Problem 20QP
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Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A,
who have low marginal propensities to consume, and Type B, who have high marginal
propensities to consume. In Model 2, there are only Type A consumers. Then, a decrease in the
exogenous taxes would lead to higher output in Model 2 than in Model 1
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