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    Show from national income accounting that
    A. An increase in taxes (while transfers remain constant) must imply a change in net exports, government purchase, or the saving-investment balance.

    B. An increase in personal disposable income must imply an increase in consumption or an increase in saving.

    C. An increase in both consumption and saving must imply an increase in disposable income.

    [For both B and C assume that there are no interest payments by household or transfer payments to foreigners)

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    Solution Preview

    Show from national income accounting that
    A. An increase in taxes (while transfers remain constant) must imply a change in net exports, government purchase, or the saving-investment balance.

    B. An increase in personal disposable income must imply an increase in consumption or an increase in saving.

    C. An increase in both consumption and saving must imply an increase in disposable income.

    [For both B and C assume that there are no interest payments by household or transfer payments ...

    Solution Summary

    Show from national income accounting that
    A. An increase in taxes (while transfers remain constant) must imply a change in net exports, government purchase, or the saving-investment balance.

    B. An increase in personal disposable income must imply an increase in consumption or an increase in saving.

    C. An increase in both consumption and saving must imply an increase in disposable income.

    [For both B and C assume that there are no interest payments by household or transfer payments to foreigners)

    $2.49

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