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In the Keynesian-Cross Model,assume That the Analysis of Taxes Is

Question 91

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In the Keynesian-cross model,assume that the analysis of taxes is changed so that taxes,T,are made a function of income,as in T = T + tY,where T and t are parameters of the tax code and t is positive but less than 1.As compared to a case where t is zero,the multiplier for government purchases in this case will:


A) not change.
B) be smaller.
C) be bigger.
D) be equal to 1.

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