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An increase in taxes reduces aggregate expenditures by an
amount equal to
the change in taxes multiplied by
?b.
the change in taxes multiplied by
(?b/1 ? b).
the change in taxes multiplied by
(1/1 ? b).
the change in taxes.
An increase in taxes reduces aggregate expenditures by an
amount equal to
the change in taxes multiplied by
?b.
the change in taxes multiplied by
(?b/1 ? b).
the change in taxes multiplied by
(1/1 ? b).
the change in taxes.
Solution
An increase in taxes reduces aggregate expenditures by an amount equal to the changes in taxes
multiplied by b.
A change in autonomous taxes shifts tge aggregate expenditure in the opposite direction of the
change in govt purchases. If the taxes go up aggregate expenditure will go down by aa fraction of
the change.
A decrease in autonomous taxes shifts the aggregate expenditure upward and vice versa
An increase in taxes reduces aggregate expenditures by an amount equal.docx

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An increase in taxes reduces aggregate expenditures by an amount equal.docx

  • 1. An increase in taxes reduces aggregate expenditures by an amount equal to the change in taxes multiplied by ?b. the change in taxes multiplied by (?b/1 ? b). the change in taxes multiplied by (1/1 ? b). the change in taxes. An increase in taxes reduces aggregate expenditures by an amount equal to the change in taxes multiplied by ?b. the change in taxes multiplied by (?b/1 ? b). the change in taxes multiplied by (1/1 ? b). the change in taxes. Solution An increase in taxes reduces aggregate expenditures by an amount equal to the changes in taxes multiplied by b. A change in autonomous taxes shifts tge aggregate expenditure in the opposite direction of the change in govt purchases. If the taxes go up aggregate expenditure will go down by aa fraction of the change. A decrease in autonomous taxes shifts the aggregate expenditure upward and vice versa