Chapter 7

Question 1

Net taxe revenue

Answer 1

T=tY
where Y is GDP and t is the net tax rate—the increase in net tax revenue generated when GDP increases by $1.

Question 2

Budget balance

Answer 2

T−G

Question 3

Disposable income

Answer 3

Y−T=Y(1−t)

Question 4

Desired import

Answer 4

mY
where Y is GDP and m is the marginal propensity to import, the amount that desired imports rise when national income rises by $1.

Question 5

Net export

Answer 5

X−mY

Question 6

Desired consumption

Answer 6

c+MPC(1−t)Y

Question 7

With government marginal prpensity to spend

Answer 7

MPC(1−t)−m

Question 8

Autonomous expenditure

Answer 8

c+I+G+X+(MPC(1−t)−m)Y

Question 9

Simple multiplier

Answer 9

1/(1−(MPC(1−t)−m))