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Assume a place called Willville is in recession. Congress decides to pass a bill in hopes of increasing real GDP by $300 billion. With an
Assume a place called Willville is in recession. Congress decides to pass a bill in hopes of increasing real GDP by $300 billion. With an mpc=0.8:
a. By what amount would the necessary change in government expenditures need to be to accomplish this goal?
b. By what amount would the necessary change in (net) taxes need to be?
c. This question involves the type of fiscal policy known as discretionary. Which kind did you "use", expansionary or contractionary?
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