An open economy with a government sector is in equilibrium. Assume the following: Marginal propensity to
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- An open economy with a government sector is in equilibrium. Assume the following:
Marginal propensity to save = 0.4
Marginal propensity to tax = 0.2
Marginal propensity to import = 0.2
Showing your method of working, calculate by how much the equilibrium level of national income would fall, if injections in the economy are reduced by $60m.
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