Arushi! Akshay! Please Help!

[Ashima]

[Homer Simpson]

http://discussion-forum.2150183.n2.nabble.com/JNU-2012-Answer-Key-td7580041.html

[Ashima]

I did not get it! Could you please explain it in detail?

[Arushi :))]

http://discussion-forum.2150183.n2.nabble.com/JNU-2012-SSS-DOUBTS-tp7587457p7587518.html;cid=1399928381756-882
i have solved it here,,
See, its very simple, only thing to note is there is change in income because of taxes / govt spending ..
So always equate del Y accoordingly :)
Let me know in case of doubt :)

[Ashima]

Thanks Arushi.
I understood all except 25th.

The doubt:

This question is same as 23 except for the part that taxes are imposed on workers and not on non-workers.
Here, it is given that workers consume their entire income!
Y= 0.75Y+C+G
The equation remains the same,
But the workers are consuming their whole income. This means tax collection is zero before and after the changes. (How'd you get this? ) 
Budget surplus before the changes is 0-G = -G
Budget surplus after the changes is 0-G' = -G' , G'>G
This means that Budget deficit has increased.
Now, this can't be a case of balanced budget multiplier because balanced budget multiplier means changing of taxes and G such that delta BS is zero.
Here, delta BS is not zero.
So , the answer is d- None of the above.

[Arushi :))]

In 23 also consumers were consuming their whole income but tax wasnt being collected from them..

In 25, they are consuming their whole income again and taxes are imposed on them now,

Their disposable income would have been Y - T

and we are given that they are consuming whole Income, i.e MPC out of Y is given here....
We cant take C = 1( Y - T)
They are consuming 100 % of their Y , so how would they pay taxes ???

[Ashima]

Oh acha! I got it! :) You rock man!