a) Solve for equilibrium output in terms of the exogenous variables. b) What is the multiplier? Is the multiplier higher whent1is 0 or whent1is positive? Note)t1= 0is the same as the baseline case we covered in class when taxes are exogenous. c) Supposec0increases by $300 m. What is the change in equilibrium Y when c1= 0.5 and t1= 0.2. What about whenc1= 0.5 and t1= 0?

a) Solve for equilibrium output in terms of the exogenous variables. b) What is the multiplier? Is the multiplier higher whent1is 0 or whent1is positive? Note)t1= 0is the same as the baseline case we covered in class when taxes are exogenous. c) Supposec0increases by $300 m. What is the change in equilibrium Y when c1= 0.5 and t1= 0.2. What about whenc1= 0.5 and t1= 0?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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