Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much
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Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? How large a tax cut would be needed to achieve the same increase in aggregate demand? Determine one possible combination of government spending increases and tax decreases that would accomplish the same goal.
LO13.1
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Related Book For
Macroeconomics
ISBN: 9781259915673
21st Edition
Authors: Campbell McConnell, Stanley Brue , Sean Flynn
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