Adding Investment

Taxes are personal taxes di pi by the amount of tax

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Unformatted text preview: or Investment. √ Taxes are Personal Taxes DI < PI by the amount of tax revenues; GDP, NI, and PI will be equal √ 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.

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