Within the classical model, suppose that there is a lump-sum increase in taxes, for example, $5 per person.

Within the classical model, suppose that there is a lump-sum increase in taxes, for example, $5 per person. Explain and illustrate (ie draw graphs that show) the effects of such a tax increase on each of the following (this does not mean you need a graph for each, but that there are a set of graphs that will show what happens to each of these variables)

a.output

b.the price level

c. the rate of interest

d. saving

e. consumption

f.investment spending 

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