Suppose the government increases both taxes a government purchases by $10,000. Assuming th the marginal propensity to consume is 0.75, calculate the change in private saving, government saving, and total saving.
Suppose the government increases both taxes a government purchases by $10,000. Assuming th the marginal propensity to consume is 0.75, calculate the change in private saving, government saving, and total saving.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Loanable funds market equilibrium
S
Equilibrium real
interest rate
\I(r)
Equilibrium level
of investment
S, I
Suppose the government increases both taxes and
government purchases by $10,000. Assuming that
the marginal propensity to consume is 0.75,
calculate the change in private saving,
government saving, and total saving.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78664e34-f555-4df8-8abc-44c0302d65c7%2F85e81cf4-6484-4341-a482-cc33aa20fec0%2F8rzrv6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Loanable funds market equilibrium
S
Equilibrium real
interest rate
\I(r)
Equilibrium level
of investment
S, I
Suppose the government increases both taxes and
government purchases by $10,000. Assuming that
the marginal propensity to consume is 0.75,
calculate the change in private saving,
government saving, and total saving.
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