1. Given the government expenditure, whether the government budget is in surp lus or deficit dep ends on the tax revenue which itself depends on rate of tax. Please derive the tax rate at which the government budget is in balance. Draw the graph that reflects the relation between tax rate and deficit (or surplus)
Question 1 Suppose in an open economy the consumption function take the form C=100+0.8 Tax is the proportion of income with the tax rate to be given by 0. 2. Meanwhile import depends on the domestic income with the function given by
What is economics? Normative Definition Economics is the science that studies how to efficiently allocate economic resources Positive definition economics is the science that studies how an economy operates or how economic variables are
Introduction The aim of this chapter is to study how output is determined in Keynesian framework. The analysis in this chapter is often named multiplier analysis
Introduction The objective of this chapter is to put the previously discussed two models --the models of product market and money market --together and discuss how output and interest rate is determined The model presented in this chapter is often called the IS-LM model (IS: the product market model; LM the money market model)