a) Solve for equilibrium output in terms of the exogenous variables. b) What is the multiplier? Is the multiplier higher whent1is 0 or whent1is positive? Note)t1= 0is the same as the baseline case we covered in class when taxes are exogenous. c) Supposec0increases by $300 m. What is the change in equilibrium Y when c1= 0.5 and t1= 0.2. What about whenc1= 0.5 and t1= 0?
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a) Solve for equilibrium output in terms of the exogenous variables.
b) What is the multiplier? Is the multiplier higher whent1is 0 or whent1is positive? Note)t1= 0is the same as the baseline case we covered in class when taxes are exogenous.
c) Supposec0increases by $300 m. What is the change in equilibrium Y when c1= 0.5 and t1= 0.2. What about whenc1= 0.5 and t1= 0?
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- Suppose the following model of govemment efficiency. Ublity function over consumption of private goods (C) and pubic goods (G) is such that this country desires to have 2 units of consumption good per each unit of public good Exogenous Income: Y= 20 Lump-sum taxT Govermment eficiency: a (This measures the number of public goods that can be produced from one unit of private consumption good) it the optimai lump-sum tax, T. that maximizes the representative consumer's utity and balance the government budget, is 10, then what is the value govemment eficiency. g? OA 1/3 OB 05 Oc. 02 OD. 23 OE none of the aboveConsider an ad-valorem tax on a good X. The Demand for good X is constant elasticity with elasticity -2. The Supply for good Y is constant elasticity with elasticity 3. Consider the same setting as for the previous question. When a tax of 1% of the price is imposed on good X, then equilibrium quantity of X exchanged declines by what percentage?The demand and supply functions for a type of good are shown by the equation: Qd = 1500-10P and Qs = 20P-1200.Each item sold is subject to a tax of IDR 15.00 per unit.Define: a. Price and balance before tax.b. Price and balance after tax.c. Draw the two balances on a cross axis.d. Producer 's tax burden .e. Government revenue from taxes on the sale of the goods.
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