Calculate the open economy multiplier with proportional taxes, T = tY, instead of lump-sum taxes as assumed in the text.

Hint: Different kinds; former can be reversed while the later cannot be reversed.

(a) Air.  Answer is correct

The tax multiplier is smaller in absolute value than the government expenditure multiplier, as the government expenditure affects the total expenditure and taxes through the multiplier. Tax multiplier also influences...

In case of a closed economy, equilibrium level of income is given by Y = C + cY + I + G Or, Y - cY = C + I + G Or,...

(c) Y = C + I – G + (X – M)

(c) When interest rates decreases then investment expenditure by businesses on capital goods like factories and equipment increase in an economy.

Multiplier is a measure of effect of change in investment on national income. It establishes relation between investment and income. It measures the change in income due to change in investment. The...

Planned spending refers to people planning to purchase final goods and services during the year. Planned output means the production units planning to produce final goods and services during the...

(i) My teacher gave me some advice. My teacher gave me a bit of advice. (ii) Can you give me some clay, please. Can you give me a lump of clay, please. (iii) The information you gave...