16. Consider an economy with a marginal propensity to consume of 0.80. a. What would its...
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16. Consider an economy with a marginal propensity to consume of 0.80. a. What would its marginal propensity to save be? b. What will happen to consumption (give the direction and size of the effect) if income taxes (T) decrease by 200, assuming that real aggregate income is unaffected? What will happen to private saving? To public saving? To national saving? c. Suppose, instead, that government purchases (G) decrease by 200. Assuming that aggregate income is unaffected, what will happen to consumption (give the direction and size of the effect)? What will happen to private saving? To public saving? To national saving? d. Now suppose that both government purchases and taxes are decreased simultaneously by 200. Assuming that aggregate income is unaffected, what will happen to consumption (give the direction and size of the effect)? What will happen to private saving? To public saving? To national saving? 16. Consider an economy with a marginal propensity to consume of 0.80. a. What would its marginal propensity to save be? b. What will happen to consumption (give the direction and size of the effect) if income taxes (T) decrease by 200, assuming that real aggregate income is unaffected? What will happen to private saving? To public saving? To national saving? c. Suppose, instead, that government purchases (G) decrease by 200. Assuming that aggregate income is unaffected, what will happen to consumption (give the direction and size of the effect)? What will happen to private saving? To public saving? To national saving? d. Now suppose that both government purchases and taxes are decreased simultaneously by 200. Assuming that aggregate income is unaffected, what will happen to consumption (give the direction and size of the effect)? What will happen to private saving? To public saving? To national saving?
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Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson
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