Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please find the effect of Y and r if there is an increase in the tax rate. Use the following equations and evaluate the total derivative.
Transcribed Image Text:(eq.1) Y = C(YT) + I(r, Y) + G
M
(eq.2) == L (Y,r)
P
(eq.3) T = tY
Given that:Cy-T, Iy > 0, 0 < Cy_T + Iy < 1, Ir < 0, Ly > 0, Lr < 0, 0 < t < 1
Endogenous variables: Y, r, T
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