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7. A decrease in government purchases of $8 billion leads to an initial $4.4 billion decrease in withdrawals. a. Find the values of MPW, MPC.
7. A decrease in government purchases of $8 billion leads to an initial $4.4 billion decrease in withdrawals. a. Find the values of MPW, MPC. and the spending multiplier in this economy. b. State the direction and size of the shift in the AD curve. c. Draw a graph showing the policy's possible effects, given an initial equilibrium price level and real output of 130 and $650 billion
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