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In: Economics

The households in Trumpcow spend 72% of their income. How much do Trumpcow’s taxes have to...

The households in Trumpcow spend 72% of their income. How much do Trumpcow’s taxes have to change in order to increase output by $943? Round to the nearest hundredth decimal place (2 decimal places).

Solutions

Expert Solution

MPC = 0.72

Change in output = $943.

Using the formula:

So, the taxes must fall by $366.73 to increase output by $943.

Rahul Sunny answered 2 years ago
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