Suppose that the marginal propensity to consume is 0.8. a. If the government increases spending by $100
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a. If the government increases spending by $100 million, what is the change in output?
b. If the government increases taxes by $100 million, what is the change in output?
c. If the government increases taxes by $100 million at the same time that it increases spending by $100 million (so the budget deficit does not increase), what is the change in output?
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a The change in output is 50...View the full answer
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Related Book For
Macroeconomics
ISBN: 9780132109994
1st Edition
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
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