In a linear aggregate demand model:A lower tax rate leads to a new equilibrium at higher output by shifting the ADcurve upwards.Oc_1(1-t) + m is the slope of the AD line in the 45-degree diagram.1/(1 - c_1(1-t) + m) is the size of the multipler.None of these are true.

Step 1: Let's evaluate each option: 1. A lower tax rate leads to a new equilibrium at higher output…

Answered: In a linear aggregate demand model: A…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 8E

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Given the Aggregate demand function of US AD= 5000 + 0.7Yd. Interpret this equation and diagramatically express the equilibrium output
An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
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An economy is described by the following: C=20+0.9Y I=120-200r Md=250+0.2Y-400r Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find agregate supply and agregate demand. b) Find the equilibrium level of Y and P. c) Graphically represent this economy. d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
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In a linear aggregate demand model: A lower tax rate leads to a new equilibrium at higher output by shifting the AD curve upwards. Oc_1(1-t) + m is the slope of the AD line in the 45-degree diagram. 1/(1 - c_1(1-t) + m) is the size of the multipler. None of these are true.