1 Keynesian cross model with a positive marginal tax rate Although our development of the Keynesian cross in this chapter assumes that taxes are a. xed amount, in many countries taxes depend on income. Let's represent the tax system by writing tax revenue as T = T + tY, where T and t are parameters of the tax code. The parameter t is the marginal tax rate: if income rises by $1, taxes rise by t x $1. 1. How does this tax system change the way consumption responds to changes in GDP? k 2. In the Keynesian cross, how does this tax system alter the government-purchases multiplier? 3. In the IS-LM model, how does this tax system alter the slope of the IS curve