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Author Question: Assuming a fixed amount of taxes and a closed economy, calculate the value of the government ... (Read 86 times)

drink

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Question 1

Show the impact of tax reduction and simplification using the dynamic aggregate demand and aggregate supply model. Clearly show and identify the impact of the tax change. Assume that aggregate demand and short-run aggregate supply shift as they typically do in the dynamic model. Show what happens to the price level and real GDP because of the tax change.



Question 2

Assuming a fixed amount of taxes and a closed economy, calculate the value of the government purchases multiplier, the tax multiplier, and the balanced budget multiplier if the marginal propensity to consume equals 0.5.



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Marked as best answer by drink on Mar 16, 2019

Briannahope

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