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Question 3. (20 points) Supposed you are an economist of one country. You believe the current unemployment rate in this country is too high. In
Question 3. (20 points) Supposed you are an economist of one country. You believe the current unemployment rate in this country is too high. In theory, the unemployment rate can be lower if national output (GDP) increases. You want to know what policy to pursue for increasing aggregate national output by $750 billion. If you have the value of marginal propensity to consume (MPC) is 0.80. Please nish the following questions and provide your policy recommendations. (1) What is the value of government purchase (spending) multiplier? (2) What is the value of tax multiplier? (3) What is your policy recommendation for government purchase or tax policy to increase national output (GDP) by $750 billion? (4) How to intuitively explain the difference between the impact of the tax multiplier and government purchase multiplier
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