Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government spending (G) is 400 , Net taxes (T) are 400 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 % . By using the above information: b) Suppose that the potential income level is 2500 in the economy. In this case, what kind of fiscal policy you can use to reach the full employment level. (show this numerically and explain it on your graph)
Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government spending (G) is 400 , Net taxes (T) are 400 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 % . By using the above information: b) Suppose that the potential income level is 2500 in the economy. In this case, what kind of fiscal policy you can use to reach the full employment level. (show this numerically and explain it on your graph)
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
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Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420,
government spending (G) is 400 , Net taxes (T) are 400 and marginal propensity to consume
(b) is 80 %, and marginal tax rate (t) is 25 % . By using the above information:
b) Suppose that the potential income level is 2500 in the economy. In this case, what kind of
fiscal policy you can use to reach the full employment level. (show this numerically and
explain it on your graph)
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