THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN) YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOW FOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA: CHANGE IN GDP = [ - MPC / (1-MPC) ] * CHANGE IN T Initially, the economy is producing $13 trillion in goods and services and net taxes is equal to $3 trillion. Moreover, potential output is $15 trillion.

a) What is the value of the net taxes multiplier? (3 POINTS)

b) What is the new value of net taxes that will make the economy reach full employment? (7 POINTS) Assume that the marginal propensity to consume is 0.8 (MPC=0.8).