Question
Consider an economy with households, government, and firms. All government spending is financed by a proportional tax of t=0.2 and debt. There is an exogenous
Consider an economy with households, government, and firms. All government spending is financed by a proportional tax of t=0.2 and debt. There is an exogenous decrease in the firm investment of 10 billion. By how much will equilibrium output change if the MPC is c = 0.8? (Answers rounded to nearest billion).
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Public Finance
Authors: Harvey Rosen, Ted Gayer
10th edition
9781259716874, 78021685, 1259716872, 978-0078021688
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