Q) For this question, assume the marginal propensity to consume is 0.7. a. Calculate the change in private saving, public saving, national saving, and investment when taxes increase $100. b. Calculate the change in private saving, public saving, national saving, and investment when government purchases decrease $100. c. Which causes a larger change in investment, the increase in taxes in part a or the decrease in government purchases in part b? Support your answer. Explain it correctly and all subparts.
Q) For this question, assume the marginal propensity to consume is 0.7. a. Calculate the change in private saving, public saving, national saving, and investment when taxes increase $100. b. Calculate the change in private saving, public saving, national saving, and investment when government purchases decrease $100. c. Which causes a larger change in investment, the increase in taxes in part a or the decrease in government purchases in part b? Support your answer. Explain it correctly and all subparts.
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 5.11P
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Q) For this question, assume the marginal propensity to consume is 0.7.
a. Calculate the change in private saving,
b. Calculate the change in private saving, public saving, national saving, and investment when government purchases decrease $100.
c. Which causes a larger change in investment, the increase in taxes in part a or the decrease in government purchases in part b? Support your answer.
Explain it correctly and all subparts.
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