Question: Suppose the government increases expenditures by 120 billion dollars while increasing taxes by 120 billion dollars, and mpc = 0.8. Assume that there is no

Suppose the government increases expenditures by 120 billion dollars while increasing taxes by 120 billion dollars, and mpc = 0.8. Assume that there is no crowing out, or acceleration effects. What is the combined effect of these changes on GDP? In other words, by how much the GDP increase, or decrease?

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