Consider an economy described by the following equations : Where is the disposable income. Given this information, what is the change in the national income if the government reduces autonomous taxes by 50 (i.e., )?
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Consider an economy described by the following equations: C = C₀ + 0· 8Y_d T = T₀ + 0· 25Y Y = C + I + G Where Y_d = Y - T is the disposable income. Given this information, what is the change in the national income if the government reduces autonomous taxes by 50 (i.e., Δ T₀ = -50)? (A) Increases by 100 (B) Decreases by 100 (C) Increases by 125 (D) Decreases by 125
Also written as: Consider an economy described by the following equations: C = C_0 + 0* 8Y_d T = T_0 + 0* 25Y Y = C + I + G Where Y_d = Y - T is the disposable income. Given this information, what is the change in the national income if the government reduces autonomous taxes by 50 (i.e., Delta T_0 = -50)?
Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
This question is on Government spending and tax multipliers, part of Keynesian cross and the multiplier in Macroeconomics.
The effect on income of changes in government spending, lump-sum taxes, transfers and income taxes.
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Question from the JNU SIS 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.