C = 450 + 0.4Y| = 350G = 150X = 70Z = 35 + 0.1YT= 0.15YYf = 1550Q.2.3Calculate the equilibrium level of income(Hint: use the multiplier method)| Calculate the tax revenue to the government of this country when the economyQ.2.4remains in equilibrium.Q.2.5Calculate what the new eqilibrium income should be if the government of thiscountry decides to cancel all taxes, implying the tax rate would now be 0%.Q.2.6Before the government decreased the tax rate, how much of governmentspending was required to bring the economy to full employment?

Q.2.3 Calculate the equilibrium level of income (Hint: use the multiplier method) Q.2.4 Calculate the tax revenue to the government of this country when the economy remains in equilibrium. Q.2.5 Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.

Q.2.3 Calculate the equilibrium level of income (Hint: use the multiplier method) Q.2.4 Calculate the tax revenue to the government of this country when the economy remains in equilibrium. Q.2.5 Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and longâ€”term impacts of such policies on the economy?
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C = 450+0.4y I = 350 G = 150 X = 70 Z = 35+0.1y T = 0.15y Yf = 1550 - Calculate the size of the multiplier - Calculate the equilibrium level of income - Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes , implying the tax rate would now be 0%.