Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP. a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table. Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places. SEE PICTURE!!! b. Compare the MPC and the multiplier with those of the pretax consumption schedule. Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers. SEE PICTURE!!
Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP. a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table. Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places. SEE PICTURE!!! b. Compare the MPC and the multiplier with those of the pretax consumption schedule. Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers. SEE PICTURE!!
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
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Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of
a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table.
Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places.
SEE PICTURE!!!
b. Compare the MPC and the multiplier with those of the pretax consumption schedule.
Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers.
SEE PICTURE!!!
Transcribed Image Text:Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below.
Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP.
a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table.
Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round
your answers to 2 decimal places.
Disposable Income, Consumption After
Billions
Tax Rate,
Consumption Before
Tax, Billions
GDP, Billions
Tax, Billions
Tax, Billions
Percent
$100
$120
200
200
300
280
400
360
500
440
600
520
700
600
b. Compare the MPC and the multiplier with those of the pretax consumption schedule.
Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers.
MPC for the lump-sum tax consumption schedule =
MPC for the pretax consumption schedule =
Multiplier for the lump-sum tax consumption schedule =
Multiplier for the pretax consumption schedule =
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