You are given the following data C=130+0.5 (1-t) Y (Consumption) T = tY (Tax revenue) (Investment) I=120 t= 0.5 (tax rate) G=200 (Government Spending) a. What does (1-t)Y show us? c. What is the budget balance (T-G) when the economy is at the equilibrium Y*? d. What will be the change in the equilibrium value of output if government spending decreases by 30?

You are given the following data C=130+0.5 (1-t) Y (Consumption) T = tY (Tax revenue) (Investment) I=120 t= 0.5 (tax rate) G=200 (Government Spending) a. What does (1-t)Y show us? c. What is the budget balance (T-G) when the economy is at the equilibrium Y*? d. What will be the change in the equilibrium value of output if government spending decreases by 30?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 1TY

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