Assume that the MPC in Australia is equal to 0.75 (C 1 =0.75), the marginal tax rate
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Question:
Assume that the MPC in Australia is equal to 0.75 (C1=0.75), the marginal tax rate is 0.3 (t=0.3), and the marginal propensity to import is 0.025 (m=0.025). What would be the impact of an $80m reduction in exports on output? Use a formula in presenting your answer.
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