Government in the cross model, Macroeconomics

Assignment Help:

The government in the cross model

Net taxes NT(Y) depends positively on real GDP in the cross model

In this model when national income increases, amount individuals pay in income taxes will increase. This is since income tax is specified as a percentage of total income. Other taxes may also increase when Y increases. Though government transfers to households will decrease. Thus net taxes NT will increase when Y increases. 

Albeit NT depends on Y, is still under the control of government. NT may change even if Y doesn't change. This means that NT is part exogenous (as it may be controlled by the government) and part endogenous (as it would automatically change when Y changes). Thus we write NT(Y) but we should remember the exogenous nature of net taxes. Government savings, which is also part exogenous and partendogenous, depends positively on Y and we write: 

SG(Y) = NT(Y) - G


Related Discussions:- Government in the cross model

Calculate the income elasticity and good , Due to the recent downturn in e...

Due to the recent downturn in economic activity, Taz, has seen his hours at work reduced. He used to work 30 hours a week at $13 and hour, but now he works 22 hours. Due to this

Price to the government of buying unsold units firms, Consider a market whe...

Consider a market where supply and demand are given by QXS = -12 + PX and QXd = 78 - 2PX. Suppose the government imposes a price floor of $35, and agrees to purchase any and all un

New screening methods adopted price do you exect prevail, You are the manag...

You are the manager of an organization in America that distributes blood to hospitals in all 50 states and the District of Columbia. A recent report indicates that nearly 50 Americ

Employees'' productivity, what measures should be taken to raise the produc...

what measures should be taken to raise the productivity of the workers?

Explain the problem involved in consumer price index, Q. Explain the proble...

Q. Explain the problem involved in consumer price Index? To explain the problems involved in calculating CPI we consider MP3 players. If you measure the average price of MP3 pl

Multiplier concept, Ask question difference between static multiplier and d...

Ask question difference between static multiplier and dyanamic multiplier

Index numbers of production, INDEX NUMBERS OF PRODUCTION  Among the com...

INDEX NUMBERS OF PRODUCTION  Among the commonly used economic indicators to monitor current trends in the economy are indices of production. The main aggregative indices used t

Estimated profit of typical start-up businesses, Typical start-up businesse...

Typical start-up businesses' estimated profit are forecasted as following: State Bad Good Probability 81% 21%

State the monetary base and the supply of money, State the Monetary base an...

State the Monetary base and the supply of money - central bank It is not possible for the central bank to print and distribute money - that would increase their debt without i

What is the marginal propensity to consume, Question 1: Consider a clos...

Question 1: Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation: C = A + bY (a) What is the marginal pr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd