Final answer:
In the Keynesian-cross analysis, when taxes are expressed as T = T0 + t*Y, it reflects their variability with economic activity, with T0 being autonomous taxes and t being the marginal tax rate based on income.
Step-by-step explanation:
In the Keynesian-cross analysis, taxes are often made a function of income to reflect their variability with economic activity. When taxes, T, are written as T = T0 + t*Y, T0 represents the autonomous taxes independent of income, and t represents the marginal tax rate as a proportion of income. In this construct, government spending and taxes adjust to influence the equilibrium level of national income. This approach demonstrates that taxes are indeed a function of national income, often calculated as a percentage of GDP, where governments collect taxes proportionally to income levels. For instance, if the marginal tax rate, t, is 0.3 (or 30%), then as the national income, Y, increases, the amount of tax collected also increases, directly affecting consumption and savings within the economy.