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We can see these same results graphically on the income-expenditure diagram. Up to now we have assumed that taxes did not vary with income, that is, earlier models considered only fixed taxes. A $1 change in GDP meant a $1 increase in disposable income and led to an increase in consumption spending given by the MPC. Since in these models consumption spending was the only type of spending that changed when GDP changed, the slope of the expenditure schedule was equal to the \\ (8) Now when we consider the impact of variable taxes, we see that a $1 increase in GDP leads to a(n) (smaller/equal/larger) increase in disposable income and a(n) increase in consumption spending as compared with the case of fixed taxes. The result is a (flatter/steeper) expenditure schedule.\ As we saw earlier, the multiplier can be derived from the slope of the expenditure schedule. The slope of the expenditure schedule can be written as

          We can see these same results graphically on the income-expenditure diagram. Up to now we have assumed that taxes did not vary with income, that is, earlier models considered only fixed taxes. A $1 change in GDP meant a $1 increase in disposable income and led to an increase in consumption spending given by the MPC. Since in these models consumption spending was the only type of spending that changed when GDP changed, the slope of the expenditure schedule was equal to the \\
(8) Now when we consider the impact of variable taxes, we see that a $1 increase in GDP leads to a(n) (smaller/equal/larger) increase in disposable income and a(n) increase in consumption spending as compared with the case of fixed taxes. The result is a (flatter/steeper) expenditure schedule.\
As we saw earlier, the multiplier can be derived from the slope of the expenditure schedule. The slope of the expenditure schedule can be written as

We can see these same results graphically on the income-expenditure diagram. Up to now we have assumed that taxes did not vary with income, that is, earlier models considered only fixed taxes. A 1 change in GDP meant a1 increase in disposable income and led to an increase in consumption spending given by the MPC. Since in these models consumption spending was the only type of spending that changed when GDP changed, the slope of the expenditure schedule was equal to the

(8) Now when we consider the impact of variable taxes, we see that a 1 increase in GDP leads to a(n) (smaller/equal/larger) increase in disposable income and a(n) increase in consumption spending as compared with the case of fixed taxes. The result is a (flatter/steeper) expenditure schedule.As we saw earlier, the multiplier can be derived from the slope of the expenditure schedule. The slope of the expenditure schedule can be written as

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