The level of income that is rather than assuming tx txo we

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Thinking about modifications in the model again: Go back to the original model again, but add a marginal propensity to invest, this is, assume that I = f ( i and Y). The MPI is defined as ?I/?Y and has a positive value. Will this increase, decrease or not affect the value of the government expenditures multiplier? Explain! 10. Now if we assume (more realistically) that tax collections are related to the level of income, that is, rather than assuming Tx = Txo, we assume that Tx = To + tY where t is the tax rate, what will that change do to the magnitude of the investment multiplier? Explain.

Reference no: EM13389041

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