In the Keynesian-Cross Model,assume That the Analysis of Taxes Is

question 91

Multiple Choice

In the Keynesian-cross model,assume that the analysis of taxes is changed so that taxes,T,are made a function of income,as in T = T + tY,where T and t are parameters of the tax code and t is positive but less than 1.As compared to a case where t is zero,the multiplier for government purchases in this case will:

• A) not change.
• B) be smaller.
• C) be bigger.
• D) be equal to 1.

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