Other things constant, if the government imposes a net tax equal to NT = tY, where t is the positive income tax rate, we would expect:

Name: Other things constant, if the government imposes a net tax equal to NT = tY, where t is the positive income tax rate, we would expect:
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The imposition of a net tax NT = tY reduces disposable income, which decreases consumption. This reduces the marginal propensity to consume, leading to a decrease in the slope of the aggregate expenditure curve.

Other Things Constant, If the Government Imposes a Net Tax