Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is 0. Now suppose government collects taxes of $50 and…

Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is 0.25. Now suppose government collects taxes of $50 and spends the entire amount. As a result:A)the equilibrium level of real income and the price level will both remain unchanged.B)nominal wage rates will fall.C)the equilibrium level of income will rise to $420.D)the equilibrium level of income will rise to $430.

Join the Conversation

2 Comments

  1. 897148 96637An attention-grabbing discussion is worth comment. I believe that you ought to write a lot more on this matter, it wont be a taboo subject however generally persons are not sufficient to talk on such topics. To the next. Cheers 762556

Leave a comment

Your email address will not be published.