If we assume marginal propensity to consume (b) is 80 % and marginal tax rate (t)is 15 %, and marginal propensity to import is 18 %, then 25 billion increase government expenditure will increase national income by 100 billion. True or false? Why?

If we assume marginal propensity to consume (b) is 80 % and marginal tax rate (t)is 15 %, and marginal propensity to import is 18 %, then 25 billion increase government expenditure will increase national income by 100 billion. True or false? Why?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 7SQ

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