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Policymakers are trying to decide how to have the largest impact on their economy through fiscal stimulus (decreasing taxes, increasing G). Their first policy option
Policymakers are trying to decide how to have the largest impact on their economy through fiscal stimulus (decreasing taxes, increasing G). Their first policy option is to increase government spending by $550,000. Their second option is to cut taxes by $550,000. Using the government spending and tax multipliers, show which option will have the larger impact on the economy. The policymakers estimate that the MPC for the economy is 0.8
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