View the step-by-step solution to:

In the article by Julie Doyle, it was revealed that the government would withdraw funding to the higher education sector.


In the article by Julie Doyle, it was revealed that the government would withdraw funding to the higher education sector. As a result, university fees are expected to increase, and the income threshold to repay HECs debt has been lowered. The article states that these changes are expected to "save [the government] $2.8 billion over four years." The key reason for this was to reduce the government budget deficits that accumulated as a result of the Global Financial Crisis. In answering the following questions, use the equation BD = G - T and T = tY where t = tax rate. 


What will happen to AD and total income if G is reduced, ceteris paribus

 A.  They will fall

 B.  They will rise

 C.  They will stay the same


If tax rates stay the same, what will happen to total tax revenue

 A.  It will rise

 B.  It will stay the same

 C.  It will fall


The effect on the budget deficit is as follows:

 A.  It will definitely worsen

 B.  It will definitely improve

 C.  It is unclear whether it will worsen or improve

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question