Question
Suppose that the government of Malud increases both its own spending and autonomous taxes by $300 and the economys multiplier equals 2.5. If consumers spend
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? $____________?
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Public Finance and Public Policy
Authors: Jonathan Gruber
4th edition
1429278455, 978-1429278454
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