Re: ISI 2004 Q1 (v)

Posted by kk on Mar 09, 2015; 1:46pm
URL: http://discussion-forum.276.s1.nabble.com/ISI-2004-Q1-v-tp7595891p7595902.html

the income will increase.if we take into account the disposable income..Y-C+I+tY  (AS G=tY)
THEREFORE Y=C+c(Y-tY) +I+tY
SO  Y= (C+I)/ [1-{c(1-t)+t}]
 WHEN TAXES INCREASE THAT IS BECOME t'y
  Y'=(C+I)/ [1-{c(1-t')+t'}]
THE DENOMINATOR OF Y' IS LESS THAN Y..THEREFORE Y' IS MORE..SO INCOME RISES.