What is the formula for the government spending multiplier? Tax Multiplier? Calculate both multipliers assuming an MPC of .6 Graph an economy in the AD AS model with Potential Output of $600 and Real GDP at $450. Calculate the output gap and identify it as a recessionary or inflationary gap. How much fiscal stimulus is needed to close the gap? show work and use formulas for government spending multiplier and tax multiplier. Show all work Assume the government increases government spending by $50, what is the impact on AD? Assume the government decreases taxes by $50, what is the impact on AD?

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The government spending multiplier and tax multiplier are formulas that help estimate the impact of ... View the full answer