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Suppose the lowest level of the output gap during the Great Recession was -6 percent in July 2009. Many people believe that the multiplier used
Suppose the lowest level of the output gap during the Great Recession was -6 percent in July 2009. Many people believe that the multiplier used in the IS curve was 1.8. Assume Rt = r and that monetary policy is not being used, what would the percent change in government expenditure be to close this gap in short run output?
a) 3.14
b) 4.97
c) 3.33
d) 5.60
Please answer it with proper explaination
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