Use the following data If full employment output is 6 trillion dollars higher than the current GDP,
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Question:
Use the following data If full employment output is 6 trillion dollars higher than the current GDP, how much of a change in taxes would move the equilibrium to full employment? Ignore any private investment crowding out the effect of changes in government fiscal surplus or deficit during the current year. Answer in trillions with two decimal point precision. Include minus sign of change as negative
| Marginal propensity to consume | 0.9 | |
| Investment | 7 | trillion dollars |
| Government spending except for transfer payment programs | 5 | trillion dollars |
| Taxes | 6 | trillion dollars |
| Exports | 4 | trillion dollars |
| Imports | 5 | trillion dollars |
| Net Capital Outflow | -1 | trillion dollars |
Expert Answer:
The change in taxes needed to move the equilibrium to full employment can be calculated usin... View the full answer
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