Find (a) the reduced form, (b) the numerical value of Ye, and (c) the effect on the

Question:

Find

(a) the reduced form,

(b) the numerical value of Ye, and

(c) the effect on the multiplier if an income tax T with a proportional component t is incorporated into the model, given

where C0 = 85, I0 = 30, T0 = 20, b = 0.75, and t = 0.2. image text in transcribed

or substituting in (4.52), image text in transcribed

(c) The multiplier is changed from 1/(1 –b) to 1/(1 –b + bt). This reduces the size of the multiplier because it makes the denominator larger and the fraction smaller: image text in transcribed

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Schaum S Outline Of Mathematical Methods For Business Economics And Finance

ISBN: 978-1264266876

2nd Edition

Authors: Luis Moises Pena Levano

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Question Posted: Sep 20, 2024 06:03 AM

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Find (a) the reduced form, (b) the numerical value of Ye, and (c) the effect on the

Question:

Y = C +1 C = Co+bYa T = To+tY Y = Y-T = To

Step by Step Answer:

Schaum S Outline Of Mathematical Methods For Business Economics And Finance

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