Suppose that the federal government decides to increase purchases by $10 billion. Briefly explain why this increase

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Suppose that the federal government decides to increase purchases by $10 billion. Briefly explain why this increase in purchases is likely to have a multiplier effect. If the tax rate on personal income is relatively low, will the size of the multiplier effect be larger or smaller than if the tax rate is relatively high? Briefly explain.
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Macroeconomics

ISBN: 9780132109994

1st Edition

Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty

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