The annual (Initial) GDP of a Simple Open economy is 10,000 units with annual savings of...

The annual (Initial) GDP of a Simple Open economy is 10,000 units with annual savings of 1500 units and a 20% Tax Rate and a 10% Transfer Payment rate. (a) Show and explain the changes on annual GDP, Consumption, Savings and Net Taxes to an increase in annual Government Spending from 1000 units to 1500 units? (b) What would be the change on the annual GDP, Consumption, Savings and Net Taxes to a decrease in annual Government Spending from 1000 units to 500 units and initial annual savings changed from 1500 units to 1000 units? Show and explain all calculations?

Expert Solution

Rahul Sunny answered 2 years ago

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