Calculate and graph what happens to ttaxes cconsumption, Business Economics

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Calculate and graph what happens to ttaxes cconsumption

Calculate and graph what happens to T(taxes), C(consumption), AD(aggregate demand), GDP, and Prices if the President raises taxes by 100 billion and the MPC = .80.

solution. AD = 1/(1-0.80) = 5

increase in spending = 100/5 = 20 billion

government will increase spending by 20 billion

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Business Economics: Calculate and graph what happens to ttaxes cconsumption

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Business Economics: Calculate and graph what happens to ttaxes cconsumption

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