Tax is a source of revenue to the government. The imposition of tax by the government...

 

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Tax is a source of revenue to the government. The imposition of tax by the government is a leakage to the circular flow of national income. When the households and firms had to pay for the taxes, less amount of money will be passed on to the flow of income. There are two types of tax that the government can impose which are autonomous tax and induced tax. C = 20 + 0.9Yd, I= $10 million T= $20 million , G= $20 million YE = SX Given above the information of 4-sector economy. a) Compute the national income equilibrium using an autonomous tax. b) Illustrate by using diagram based on AD/AS approach. c) Justify your opinion on the consumption. Tax is a source of revenue to the government. The imposition of tax by the government is a leakage to the circular flow of national income. When the households and firms had to pay for the taxes, less amount of money will be passed on to the flow of income. There are two types of tax that the government can impose which are autonomous tax and induced tax. C = 20 + 0.9Yd, I= $10 million T= $20 million , G= $20 million YE = SX Given above the information of 4-sector economy. a) Compute the national income equilibrium using an autonomous tax. b) Illustrate by using diagram based on AD/AS approach. c) Justify your opinion on the consumption.

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The equilibrium level of national income is considered as the significant component and incorporates ... View the full answer