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7. Expenditure multiplier and fiscal policy: IfJapan's government wants to close the above gap by changing government purchases of goods and services (G). Suppose marginal

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7. Expenditure multiplier and fiscal policy: IfJapan's government wants to close the above gap by changing government purchases of goods and services (G). Suppose marginal propensity to consumer is 0.30. 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). Yen (billions) Change in (5 (government purchases) Second round increase in consumer spending Third round increase in consumer spending Forth round increase in consumer spending ------total increase in real GDP

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