Suppose that the MPC out of disposable income was 0.8 and the tax ...

[Jramos095]

Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T =  30 + 0.25Y.
 
  An increase in the intercept of the tax function of 10 units (from  30 to  20) would cause equilibrium income in the simple Keynesian model to fall by a. -20 units.
  b. 10 units.
  c. 20 units.
  d. 40 units.

Question 2

According to real business cycle theory, an increase in taxes
 
  a. would significantly reduce labor supply, increase employment, and decrease output.
  b. a decline in employment but not in output.
  c. would significantly reduce labor supply, and decrease employment and output.
  d. no change in output and employment.

[firehawk60]

Answer to Question 1

C

Answer to Question 2

C

[Jramos095]

Correct answers!

[firehawk60]

Great! Please up vote