4. Suppose that households in the Philippines save 20% of every additional peso in income thatthey receive. What will happen to the country's aggregate demand if there is a P4 billionincrease in lump-sum taxes?

Given saving % = 20 % MPC = 1 – MPS MPC = 1 – 0.20 = 0.80 Now, Spending multiplier = 1 / MPS = 1 /…

Answered: lump-sum taxes?

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Economics

lump-sum taxes?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Suppose that households in the Philippines save 20% of every additional peso in income that
they receive. What will happen to the country's aggregate demand if there is a P4 billion
increase in lump-sum taxes?

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