Class 12 > Previous Year Questions

Question

In the above question, calculate the effect on output of a 10 per cent
increase in transfers, and a 10 per cent increase in lump-sum taxes. Compare the effects of the two.
Medium

Solution

From the above results, we can conclude that increase of 10 percent in transfers will raise the income by 40%.
And, increase of 10% in tax will lead to a fall in the income by 40%

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