Question
Refer to the previous question.If instead the government wanted to reach the natural level of GDP with a tax cut, how large would that tax
Refer to the previous question.If instead the government wanted to reach the natural level of GDP with a tax cut, how large would that tax need be?
This is the previous question:
The economy is in recession: real GDP is $5 billion.Real GDP is $1 billion short of the natural level of GDP.The government wants to move the economy to its natural level of GDP using fiscal policy.The marginal propensity to consume is and you can assume there is no crowding out.How much additional government spending is required to move the economy to the natural level?
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