In the classical model of the LR closed economy, a reduction in taxes T willI.decrease private savings.I.decrease equilibrium investment spending.Select one:O A. Only I is true.O B. Only II is true.O C. Both of the above are true.O D. None of the above is true.In the classical model of the LR closed economy, with MPC=0.6 and interest sensitivityparameter b=1000, an increase in taxes by 50 (AT=50) willI.reduce private savings by 20.II.reduce equilibrium investment spending by 20.Select one:O A. Only I is true.O B. Only II is true.O C. Both of the above are true.O D. None of the above is true.

NOTE: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

In the classical model of the LR closed economy, a reduction in taxes T will I. decrease private savings. I. decrease equilibrium investment spending. Select one: O A. Only I is true. O B. Only II is true. O C. Both of the above are true. O D. None of the above is true.

In the classical model of the LR closed economy, a reduction in taxes T will I. decrease private savings. I. decrease equilibrium investment spending. Select one: O A. Only I is true. O B. Only II is true. O C. Both of the above are true. O D. None of the above is true.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In the classical model of the LR closed economy, a reduction in taxes T will
I.
decrease private savings.
I.
decrease equilibrium investment spending.
Select one:
O A. Only I is true.
O B. Only II is true.
O C. Both of the above are true.
O D. None of the above is true.
In the classical model of the LR closed economy, with MPC=0.6 and interest sensitivity
parameter b=1000, an increase in taxes by 50 (AT=50) will
I.
reduce private savings by 20.
II.
reduce equilibrium investment spending by 20.
Select one:
O A. Only I is true.
O B. Only II is true.
O C. Both of the above are true.
O D. None of the above is true.

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