Posted: March 7th, 2017
Discuss the differences between fixed and variable taxes and provide examples of each.
Suppose that the government decreases spending by $100 billion. What happens to aggregate demand? What is the likely effect on prices and output? Where are the new equilibrium price level and GDP relative to the old levels?
Suppose the government decreases taxes by 20 percent. Describe the effects to the equilibrium price level and GDP. Make sure to address consumption, disposable income, and aggregate demand in your answer. ?
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