15. If government spending increases by 1 billion euro, and mpc=0.4, how much should tax change to bring about the same increase in equilibrium income as government spending? a. taxes should increase by 2.5 billion euro b. taxes should decrease by 2.5 billion euro c. taxes should decrease by 1 billion euro d. taxes should increase by 1 billion euro

15. If government spending increases by 1 billion euro, and mpc=0.4, how much should tax change to bring about the same increase in equilibrium income as government spending? a. taxes should increase by 2.5 billion euro b. taxes should decrease by 2.5 billion euro c. taxes should decrease by 1 billion euro d. taxes should increase by 1 billion euro

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.A: Graphical Treatment Of Taxes And Fiscal Policy

Problem 2TY

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