Suppose a country decreases income taxes by $300 billion, and this leads to an increase in consumption

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Suppose a country decreases income taxes by $300 billion, and this leads to an increase in consumption spending of $150 billion. Suppose the multiplier is 1.5 and the economy’s real GDP is $5,000 billion.

In which direction will the aggregate demand curve shift and by how much?

Related Book For answer-question

Macroeconomics

ISBN: 978-1319120054

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

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Posted Date: Feb 14, 2024 05:17 AM

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Suppose a country decreases income taxes by $300 billion, and this leads to an increase in consumption

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The decrease in income taxes leads to an increase in disposab... View the full answer

Macroeconomics

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