Question: Suppose there is no crowding-out effect. The marginal propensity to consume is 3/4, and the price level is fixed in the short term. Now the

Suppose there is no crowding-out effect. The marginal propensity to consume is 3/4, and the price level is fixed in the short term. Now the economy has an output which is $1000 billion below its natural level.

If the spending multiplier is 4, how much government spending needs to change to close the gap?

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