Question

You are giving the following data for an economy,c=consumption =20+0.8yd,investment I= 50,government expenditure g=20,taxes t=10,find A equilibrium level of income B if long sum taxes increase by 10 ,what is the equilibrium level of income,find the longsum tax multiplier calculate

Answer 1

A. Equilibrium level of income = 80

B. Equilibrium level of income = 90

C. Longrun Tax Multiplier = -1.25