In our simple macro model with government,consider the equation Y_D = (0.75)Y.Which of the following statements about this equation is correct? A)If disposable income increases by $0.75,then national income increases by $1.00 and total tax revenue rises by $0.75. B)Net tax revenue is equal to 75% of national income. C)If national income increases by $1.00,then disposable income increases by $0.75 and net tax revenue increases by $0.25. D)Net tax revenue is equal to 25% of disposable income. E)If national income increases by $1.00,then disposable income increases by $0.25 and net tax revenue increases by $0.75.

Question

Quizplus · Accepted Answer

The equation suggests that disposable income (YS) is 75% of national income (Y), implying that the remaining 25% of national income is taken as tax. Therefore, if national income increases by $1.00, disposable income increases by $0.75 (75% of $1.00), and net tax revenue increases by $0.25 (the remaining 25% of the $1.00 increase in national income).

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

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