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Institute an income tax

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Reference no: EM132412213

Using the equation below, answer the following questions. (Assume that there are only two types of expenditures in this economy; Investment and Consumption.)

Agg. Expenditures = $10 billion + (0.5)Yd

  1. Suppose the government decides to institute an income tax that takes half of everyone'sincome. What would the value of the Aggregate Demand Multiplier be now?

Reference no: EM132412213

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