In our simple macro model with government,consider the equation T = (0.2)Y.Which of the following statements about this equation is correct?
A)Total tax revenues are equal to 20% of disposable income.
B)Total tax revenues are equal to 20% of real GDP.
C)Net tax revenues are equal to 20% of disposable income.
D)If national income increases by $1.00,then net tax revenue increases by $0.20.
E)If total tax revenue increases by $0.20,then national income increases by $1.00.

Question

Quizplus · Accepted Answer

If national income increases by $1.00, then net tax revenue increases by $0.20.

In Our Simple Macro Model with Government,consider the Equation T