Suppose that the government increases expenditures by $150 billion while increasing taxes by $150 billion. Suppose that the MPC is 0.80 and that there are no crowding out or accelerator effects.

Question 3 40 pts Suppose that the government increases expenditures by $150 billion while increasing taxes by $150 billion. Suppose that the MPC is 0.80 and that there are no crowding out or accelerator effects. 1. What are the combined effects of these changes? (hint: graph it, then explain it) 2. Why is the combined change not equal to zero? Edit View Insert Format Tools Table 12pt Paragraph BI U AV & V TV . . . 1. The combined effects of these changes would be the government revenue and expenditures increasing by 150 million and consumers will also get 150 million of the government's spending as income for labor or sales of goods. 2. The combined change does not equal zero because out of the income they receive, 80% will be expended and 20% will not be