Question
5. Expenditure multiplier and fiscal policy: If Japan's government wants to close the above gap by changing government purchases of goods and services (G). Suppose
5. Expenditure multiplier and fiscal policy: If Japan's government wants to close the above gap by changing government purchases of goods and services (G). Suppose marginal propensity to consumer is 0.80. a. To close the output gap, government should increase or decrease G, by how much? b. Fill out the blanks in the following table (round up to two decimal points). Use "+" and "-" to represent "increase" and "decrease". $ (billions) First round change in expenditure spending Second round change in expenditure spending Third round change in expenditure spending Forth round change in expenditure spending .....total change in real GDP
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