Question

Suppose the economy is operating at equilibrium, with y 0 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?Suppose the economy is operating at equilibrium, with y 0 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?

Answer 1

the economy is operating at equilibrium, with y 0 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?Suppose the economy is operating at equilibrium, with y 0 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government.