Suppose real GDP is $10,000 billion and the basic expenditure multiplier is 2. If two tax changes
Question:
a. fixed taxes are raised by $100 billion,
b. the income-tax rate is reduced from 20 percent to 18 percent, will equilibrium GDP on the demand side rise or fall?
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The higher fixed tax reduces consumer spending but the lower incometax ...View the full answer
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Related Book For
Macroeconomics Principles And Policy
ISBN: 9780324586213
11th Edition
Authors: William J. Baumol, Alan S. Blinder
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