Business, 19.11.2019 02:31 AvaHeff

Although our development of the keynesian cross in this chapter assumes that taxes are a fixed amount, in many countries taxes depend on income. let’s represent the tax system by writing tax revenue as t = t + ty where t and t are parameters of the tax code. the parameter t is the marginal tax rate: if income rises by $1, taxes rise by t x $1.a. how does this tax system change the way consumption responds to changes in gdp? b. in the keynesian cross, how does this tax system alter the government-purchase multiplier? c. in the is-lm model, how does this tax system alter the slope of the is curve?

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Although our development of the keynesian cross in this chapter assumes that taxes are a fixed amoun...