Question

We have assumed that TAXES are a fixed amount, on consumers only, and unrelated to income....

We have assumed that TAXES are a fixed amount, on consumers only, and unrelated to income.

a. Explain how increasing TAXES affects consumption spending (C)?

b. Explain how decreasing TAXES affects pl AE and explain how this affects EQUILIBRIUM Y

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

I have given answer on paper of this question.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) As disposable income increases, consumption spending a. increases by the same amount b. decreases by...
1) As disposable income increases, consumption spending a. increases by the same amount b. decreases by the same amount c. increases by less than the increase in disposable income d. decreases by less than the increase in disposable income e. does not change at all 2) Autonomous consumption expenditures are a. identical to induced consumption b. determined primarily by transfer payments c. not influenced by disposable income d. increasing at a decreasing rate e. increasing at an increasing rate 3)...
Consumers change their purchases and move ALONG the same consumption function when: Their income changes Their...
Consumers change their purchases and move ALONG the same consumption function when: Their income changes Their tastes change The price level changes All of the above.       12) If MPC is .75 then if consumer income rises by $10,000 we would predict that consumption will: A. rise by $7500 while savings fall by $2500. B. fall by $2500 while savings rise by $7500. C. rise by $7500 while savings rise by $2500. D. fall by $2500 while savings fall by...
If autonomous consumption is $1000, the MPC = 0.75, net taxes = $500, investment spending =...
If autonomous consumption is $1000, the MPC = 0.75, net taxes = $500, investment spending = $800, and govt purchases = $500, and NX = $0, what is equilibrium GDP? Question 1 options: $1,800 $1,925 $2,566.70 $7,200 $7,700 Question 2 (1 point) The focus of the short-run macro model is on the role of Question 2 options: spending in explaining economic fluctuations labor in explaining economic fluctuations financial markets in explaining economic fluctuations output in explaining economic fluctuations resources in...
or the following problem, assume that the MPC,b, takes into account how much consumers spend as...
or the following problem, assume that the MPC,b, takes into account how much consumers spend as total income (Y) in the economy is changes. So we can rewrite our consumption function as C= a +bY Furthermore assume: a= $100 billion b=.9 GDP= $6,000 billion A)What is total Y in the economy ? B)What is consumption in the economy C)What are savings in the economy ? D) If consumers were the only ones buying goods in the economy, would the economy...
Suppose the following aggregate expenditure model describes the US economy: C = 1 + (8/9)Yd T...
Suppose the following aggregate expenditure model describes the US economy: C = 1 + (8/9)Yd T = (1/4)Y I = 2 G = 4 X = 3 IM = (1/3)Y where C is consumption, Yd is disposable income, T is taxes, Y is national income, I is investment, G is government spending, X is exports, and IM is imports, all in trillions $US. (a) Derive a numerical expression for aggregate expenditure (AE) as a function of Y. Calculate the equilibrium...
GDP computations. Consumption = C, Taxes = T, Investment Demand = ID, Disposable Income = Y-T,...
GDP computations. Consumption = C, Taxes = T, Investment Demand = ID, Disposable Income = Y-T, Govt. Purchases of Goods and Services = G Aggregate Expenditure = AE, the MPC is constant, Foreign trade is zero. In case you care, autonomous consumption = $10. AS = Y T Y-T C ID G X-Im AE d(Invt.) $1,800 $200 $1,210 $500 $200 $10 $2,000 $200 $1,360 $500 $200 $10 $2,200 $200 $500 $200 $10 $2,400 $200 $500 $200 $10 $2,600 $200 $500...
Suppose an economy is represented by the following equations. Consumption function C = 300 + 0.8Yd...
Suppose an economy is represented by the following equations. Consumption function C = 300 + 0.8Yd Planned investment I = 400 Government spending G = 500 Exports EX = 200 Imports IM = 0.1Yd Autonomous Taxes T = 500 Marginal Tax Rate t=0.25 Planned aggregate expenditure AE = C + I + G + (EX - IM) By using the above information calculate the equilibrium level of income for this economy and explain how multiplier changes when we have an...
73. Using your knowledge of economics, answer the following: 73a. The most comprehensive (inclusive of goods)...
73. Using your knowledge of economics, answer the following: 73a. The most comprehensive (inclusive of goods) measure of the rate at which prices are changing is: a. the CPI b. the balance-of-payments index. c. the GDP Chain Price Index. d. the index of wage. 73b. An index of prices of all domestically produced goods in the economy is the a. Consumer Price Index. b. GDP Chain Price Index. c. Producer Price Index. d. Wholesale Price Index. 73c. In the income-expenditure...
You are provided with the information give below. Y = National income T = Taxes =...
You are provided with the information give below. Y = National income T = Taxes = 0.3Y C = Consumption = 200 + 0.9 (Y – T) I = Investment = 600 G = Government spending = 1,000 X = Exports = 600 Y = Imports = 0.1 (Y – T) Determine the government spending multiplier. Assume that the full employment level of output is 6,000. What level of government spending would be necessary to reach that level? Explain
In the neoclassical model with fixed income, if there is a decrease in net taxes with...
In the neoclassical model with fixed income, if there is a decrease in net taxes with no change in government spending, then public saving ______ and private saving ______ Select one: a. increases; increases b. increases; decreases c. decreases; increases d. decreases; does not change
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT