Unformatted text preview: or Investment.
√ Taxes are Personal Taxes DI < PI by the amount of tax revenues;
GDP, NI, and PI will
√ Fixed amount of taxes (lump-sum) regardless of level of GDP
√ Price level is constant
Most of these assumptions will be dropped in Chapter 12 when we discuss how government
changes in its expenditures and taxes can alter equilibrium GDP and the rate of inflation
Government Purchases and Equilibrium GDP
Increases in public spending, like increases in private spending, will boost the
aggregate expenditure schedule and resul...
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This note was uploaded on 01/30/2014 for the course ECON 259 taught by Professor Geanakopolis during the Fall '10 term at Purdue.
- Fall '10