The government raises lump-sum taxes on income by $100 billion, and the neoclassical economy adjusts so that output does not change. If the marginal propensity to consume is 0.6, public saving:

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When the government raises lump-sum taxes on income by $100 billion and output does not change, it means that the entire amount of the tax increase goes into public saving, increasing it by $100 billion. The marginal propensity to consume affects private consumption but does not directly affect the calculation of public saving in this scenario.

The Government Raises Lump-Sum Taxes on Income by $100 Billion