Suppose full employment level of output is Rs 680, the equilibrium level of output is Rs 600 and the marginal propensity to consume is . Full employment output can be achieved by Rs 16 increase in government spending. Which of the following changes in net lump sum tax revenues result in full employment output?
Tap an option to check your answer.
Checking your account…
Suppose full employment level of output is Rs 680, the equilibrium level of output is Rs 600 and the marginal propensity to consume is 0· 80. Full employment output can be achieved by Rs 16 increase in government spending. Which of the following changes in net lump sum tax revenues result in full employment output? (A) A Rs 20 decrease (B) A Rs 20 increase (C) A Rs 16 increase (D) A Rs 16 decrease
Also written as: Suppose full employment level of output is Rs 680, the equilibrium level of output is Rs 600 and the marginal propensity to consume is 0* 80. Full employment output can be achieved by Rs 16 increase in government spending. Which of the following changes in net lump sum tax revenues result in full employment output?
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.
TestStop has 45 past-paper questions on this subtopic; the nearest in year are below.
Question from the JNU SIS 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.