=+What explains the difference? (Hint: The multiplier for government purchases of goods and services is 1/(1 -
Question:
=+What explains the difference? (Hint: The multiplier for government purchases of goods and services is 1/(1 - MPC). But since each $1 change in government transfers only leads to an initial change in real GDP of MPCx $1, the multiplier for government transfers is MPC/(1 - MPC).]
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