What is the multiplier after the change in the tax regime

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Reference no: EM13234098

Suppose the Economy has the following relationships in the Goods Market?
C = 160 + 0.7*( Y - T ) + I + G
I = 150
G = 150
T = t1* Y, where t1 = 0.1

a.) Explain the tax system in this country?

b.) Solve for Equilibrium GDP (Y). Assume NX = 0

c.) What are C and Yd, and T?

d.) What are private savings and public savings?

e.) What happens to your answers in b.), c.), and d.) if the tax rate decreased to 8%?What was the original expenditure multiplier in this country? What is the multiplier after the change in the tax regime?

Reference no: EM13234098

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