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Ty-ped and correct answer please. I ll rate accordingly. 2. Assume a closed economy in a deep recession with exogenous investment (l), exogenous taxes (T),
Ty-ped and correct answer please. I ll rate accordingly.
2. Assume a closed economy in a deep recession with exogenous investment (l), exogenous taxes (T), exogenous government spending (G), and AC = mpc * (AY- AT). Assume the economy's marginal propensity to consume is 0.8. Suppose that businesses decrease autonomous investment. To avoid a recession, the government decreases autonomous tax by $5 billion such that total demand (C+|+G) remains unchanged (that is, AT: -5). How much did autonomous investment decrease? a. $4 billion b. $5 billion C. $8 billion d. $20 billion e. $25 billion Please provide a detailed explanation of the concepts used and how to solveStep by Step Solution
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