Although our development of the Keynesian cross in this chapter assumes that taxes are a fixed amount, most countries levy some taxes that rise automatically with national income. (Examples in the United States include the income tax and the payroll tax.) Let's represent this type of tax system by writing tax revenue (T) as T = T * + tY, where Y is income, T * is a lump-sum tax, and t is the marginal tax rate. When income rises by $1, the value of new taxes collected is t * $1.
A. How does this tax system change the way consumption responds to changes in GDP?
B. In the Keynesian cross, how does this tax system alter the government-purchase multiplier?
C. In the IS-LM model, how does this tax system alter the slope of the IS curve?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Although our development of the Keynesian cross in this chapter assumes that taxes are a fixed amount, most countries levy some taxes that ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
The "underground economy" refers to A. the formal sector of the economy in developing countries. B. the sector of the economy that earns profits that are higher than average. C. the buying and selling of goods that is concealed from the government.
Answers (1)
A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. the cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00.
Answers (1)
OnTrend, a cosmetology trade publication, utilizes the resources of other organizations as needed and business relationships are temporary as well as flexible.
Answers (1)
Which of the following types of advantages is likely to be the most affordable
Answers (1)
a recently renovated catering facility has opened in your town. the property, for insurance purposes, is valued at $1,023,000 and rate is 0.126 per hundred, what is the cost to the owners for this coverage?
Answers (1)
New Questions in Business
Should the law allow someone that becomes voluntarily incapacitated through intoxication or other means escape from a contractual obligation using incapacity as a defense?
Answers (1)
Price per Ticket Quantity Demanded $13 1,000 11 2,000 9 3,000 7 4,000 5 5,000 3 6,000 Refer to the information and assume the stadium capacity is 5,000.
Answers (1)
Carol Bates, a young, dynamic, and affluent banker, likes to shop online and try out new products. She likes to keep herself updated about the latest products introduced in the market.
Answers (1)
The equilibrium quantity in the market for widgets is 250 per month when there is no tax. Then a tax of $6 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue.
Answers (1)
Watching consumers' actions during the postpurchase evaluation step of the consumer decision-making process led to the development of Chipotle's best-selling product, the Multiple Choice a. fried burrito. b. soft taco. c. taco salad. d.
Answers (1)