uring the 1930s the U.S. entered the Great Depression. During the Great depression investment fell from a yearly rate of $16.7 billion to $1.7 billion. In 1932, President Hoover increased income taxes. Assume the MPC is .92 A) What effect did the decline in investment have on aggregate demand (AD) ? B) Assume that Hoover increased income taxes by $12 billion. How would Hoover’s tax increase have affected AD.

uring the 1930s the U.S. entered the Great Depression. During the Great depression investment fell from a yearly rate of $16.7 billion to $1.7 billion. In 1932, President Hoover increased income taxes. Assume the MPC is .92 A) What effect did the decline in investment have on aggregate demand (AD) ? B) Assume that Hoover increased income taxes by $12 billion. How would Hoover’s tax increase have affected AD.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 5SQP

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