Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Question
Chapter 16, Problem 9P
To determine
To explain:
The reason behind a larger reduction in taxes is required to create similar increment in aggregate demand,as it can be by increase in government purchases.
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Chapter 16 Solutions
Exploring Macroeconomics
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Similar questions
- The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax cut.arrow_forwardOur economics have redone their calculations. They now estimate that citizensin our country have an MPC of 0.60. We can fix the problem by decreasing GDP by 250. How much should we increase taxes?arrow_forwardWhat is the Effects of Fiscal Policy on Real GDP and the Price Level?arrow_forward
- What is the aggregate expenditures function?arrow_forwardConsumer saves 15% of additional income, spends 65% of income on goods and services and spends 20% on imports. What is the tax multiplier?arrow_forwardEconomist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?arrow_forward
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