Suppose GDP is composed of consumption (C), investment (I), and government spending (G). Round your answers to the nearest whole number. If autonomous consumption is 50, the marginal propensity to consume (MPC) is 0.5, the tax rate is 15 percent, investment is 15, and government spending is 50, then the equilibrium output is 170 If autonomous consumption, MPC, investment, and government spending are unchanged, but the tax rate increases to 0.25, then the equilibrium output would be 184 If autonomous consumption, MPC, and investment are unchanged, but the tax rate increase is accompanied by government spending increasing to 70, then the equilibrium output would be 216

Suppose GDP is composed of consumption (C), investment (I), and government spending (G). Round your answers to the nearest whole number. If autonomous consumption is 50, the marginal propensity to consume (MPC) is 0.5, the tax rate is 15 percent, investment is 15, and government spending is 50, then the equilibrium output is 170 If autonomous consumption, MPC, investment, and government spending are unchanged, but the tax rate increases to 0.25, then the equilibrium output would be 184 If autonomous consumption, MPC, and investment are unchanged, but the tax rate increase is accompanied by government spending increasing to 70, then the equilibrium output would be 216

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.A: Graphical Treatment Of Taxes And Fiscal Policy

Problem 1DQ

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