Suppose that the government of Malud increases both its own spending and autonomous taxes by $300 and the economy’s multiplier equals 2.5. If consumers spend 95% of their disposable (after-tax) income, by how much will GDP change? Round your answer to one decimal place.

a) GDP will INCREASE or Decrease?

b) by how much? $____________?

Answer rating: 100% (QA)

Change in spending change in taxes 300 multiplier 25 ... View the full answer