The expiration of the FICA payroll tax cut of January 1, 2013 raised taxes by $110 billion per year. If the marginal propensity to save was 0.20, (a) by how much did consumer spending decrease initially? (b) What was the ultimate decline in aggregate demand?
The expiration of the FICA payroll tax cut of January 1, 2013 raised taxes by $110 billion per year. If the marginal propensity to save was 0.20, (a) by how much did consumer spending decrease initially? (b) What was the ultimate decline in aggregate demand?
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 5SQP
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The expiration of the FICA payroll tax cut of January 1, 2013 raised taxes by $110 billion per year. If the marginal propensity to save was 0.20, (a) by how much did consumer spending decrease initially? (b) What was the ultimate decline in aggregate
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