Suppose MPC equals 0.9, government taxes 30% of all incomes, and the marginal propensity to import equals 0.07. The economy's real GDP is currently $5,454 billion while its potential real GDP is $6,000 billion. GIven no change in the aggregate price level, what change in government spending on goods and services would bring the economy to full employment real GDP? 

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Suppose MPC equals 09 government taxes 30 of all incomes and th... View the full answer