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Assume That in the year 2025, the US economy is in a recession that would require a $1 trillion increase in total spending to get
Assume That in the year 2025, the US economy is in a recession that would require a $1 trillion increase in total spending to get back to full employment output. Answer the following questions assuming that the marginal propensity to consume is 0.8.
- Identify the least amount of government could spend to get the economy back to full employment. Show work.
- Identify the amount of a tax cut to bring the economy back to full employment. Show your work.
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