Logged out
Access All our Essays in an Instant
Swap your work for FREE access, or pay £4.99 for instant access
What is the likely magnitude of The multiplier
Member rating: No Rating | Words: | Submitted: Mon Jun 19 2006
Page Preview
On the left is an image preview of every page of this document, and below are the first 150 words with formatting removed:
What is the likely magnitude of The multiplier The model, though, needs to be expanded if it is to be of any use. It currently lacks the impact of government and foreign trade. Firstly, the impact of government will be considered. Government spending is a form of investment, and thus is incorporated into the formula as G: Y=C+I+G. Personal disposable income is the income households have after transfer payments from government and taxation to government has been accounted for. Transfer payments are included in net taxation, T. Thus, the consumption function must take account of the loss due to tax: C=A+b(Y-T) In the model, it is assumed that net taxes, T, are proportional to national income. The net tax rate is t, so the total revenue from net taxes is T=tY. If the net tax rate is 15% of national income, then if Y is increased by one unit of currency, net tax revenue will raise...
Get instant access
- Instant, unlimited access to our documents in full
- Swap your work for free access, or pay £4.99
- To see the full version of this document and 150,044 others
