Q. Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T= -30+0.25Y. an increase in the intercept of the tax function of 10 units(from -30 to -20 would cause equilibrium income in the simple Keynesian model to fall by (Solved)

1. -20 units

2. 10 units

3. 20 units

4. 40 units

  • c. 20 units
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