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If a government increases G by the same amount as it raises taxes, the aggregate output actually rises. Why is this? Suppose an economy has

If a government increases G by the same amount as it raises taxes, the aggregate output actually rises. Why is this?

Suppose an economy has an equilibrium output of 3000, consisting of 1800 of consumption and 1200 of investment.

If government spending is set at 750, financed by a tax rate of 25 percent , what will happen to output?

Assume, that at the beginning there was no G and T.

The change of aggregate output due to G

Atsakymas

The change of aggregate output due to T

Atsakymas

Total change of aggregate output.

Atsakymas

Calculate both fiscal multipliers without taxes (not considering the tax rate).

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