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3 . There is a tax - cut that increases your Disposable Income by $ 3 , 4 0 0 , which you intend to
There is a taxcut that increases your Disposable Income by $ which you intend to save $
a Calculate the MPC
b Interpret this MPCWhat does it mean? Define MPC and describe in this context.
c What is the resulting fiscal multiplier?
d Interpret the multiplier and describe the multiplier effect.
e Find the total change to the economy from this tax change.
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