Compare the impact on equilibrium real GDP of a same sized decrease in taxes and increase in

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Compare the impact on equilibrium real GDP of a same sized decrease in taxes and increase in government expenditure on goods and services.

Suppose the Trump tax cuts remain in place.
Compared to a situation with no tax change, the Tax Policy Center estimates that after tax incomes of households in the bottom fifth will rise 0.4%; the second fifth, up 0.9%; the middle fifth, up 1.3%; fourth fifth, up 1.4%; and the top fifth up 2.3%.

Fact: Middle and low income earners spend almost all their disposable incomes. High income earners save a significant part of their disposable incomes.

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Economics

ISBN: 9781292433639

14th Global Edition

Authors: Michael Parkin

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