Consider the following income/expenditure diagram in the simple Keynesian model.   If taxes, T, were increased, then Group of answer choices A) The Y = C+S+T line would shift to the right, and equilibrium Y would increase. B) the C+I+G line would shift downward, and equilibrium Y would decrease. C) The Y = C+S+T line would shift to the left, and  equilibrium Y would decrease. D) neither of the lines would shift, and equilibrium Y would stay the same. E) the C+I+G line would shift upward, and equilibrium Y would increase.

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A: Government spending multiplier = 1 / (1 - MPC) Tax multiplier = MPC / (1-MPC)

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A: Given  C=400+0.8(Y-T) I=310 G=140 T=200 So MPC=0.8

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A: The correct answer is given in the second step.

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A: T stands for Government revenue from tax. G stands for Government expenditure.

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A: The GDP change is higher than the change in government spending because of the multiplier effect.

Q: ) increase by $160.

A: Answer Disposable income increased by $ 200 C = 400+ 0.8Yd de = 0.8 dYd Now, dyd = 200 So, de = 160

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