- Messages
- 12
- Reaction score
- 3
- Points
- 3
In an economy, the marginal propensity to consume of the unemployed is higher than that of taxpayers.
The government increases expenditure on unemployment benefits by $10 million. What will the government need to do if it wishes to keep aggregate demand unchanged?
A raise taxation by less than $10 million
B raise taxation by more than $10 million
C raise taxation by $10 million
D leave taxes unchanged
The government increases expenditure on unemployment benefits by $10 million. What will the government need to do if it wishes to keep aggregate demand unchanged?
A raise taxation by less than $10 million
B raise taxation by more than $10 million
C raise taxation by $10 million
D leave taxes unchanged