How would this affect the consumption function

Reference no: EM131227880

(The Multiplier with a Proportional Income Tax) Answer the following questions using the following data, all in billions. Assume an MPC of 0.8.

a. Assuming that net taxes are equal to $200 billion regardless of the level of income, graph consumption against income (as opposed to disposable income).

b. How would an increase in net taxes to $300 billion affect the consumption function?

c. If the level of taxes were related to the level of income (i.e., income taxes were proportional to income), how would this affect the consumption function?

Reference no: EM131227880

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