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Questions › JNU › JNU SIS 2015 › Q5
2 marks, −1Macroeconomics › Keynesian cross and the multiplier › Government spending and tax multipliersEasyabout 1 min

JNU SIS 2015 Question 5: Keynesian cross and the multiplier

Using the simple Keynesian model, consider the case where taxes are a function of income such that T=50+tYT = 50 + tYT=50+tY, where ttt is the marginal tax rate. Compared to the model without taxes, the investment multiplier in this model will be

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Using the simple Keynesian model, consider the case where taxes are a function of income such that T = 50 + tY, where t is the marginal tax rate. Compared to the model without taxes, the investment multiplier in this model will be (A) same (B) larger (C) smaller (D) equal to 1

Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.

What this question tests

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 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.