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browncamel89Lv1
11 Dec 2019
Assume that a hypothetical economy with an MPC of 0.8 is experiencing a severe recession.
a) By how much would government spending have to increase to shift the aggregate demand curve rightward by $25 billion?
b) How large a tax cut would be needed to achieve the same increase in aggregate demand?
c) Determine one possible combination of government spending increases and tax decreases that would accomplish the same goal.
Assume that a hypothetical economy with an MPC of 0.8 is experiencing a severe recession.
a) By how much would government spending have to increase to shift the aggregate demand curve rightward by $25 billion?
b) How large a tax cut would be needed to achieve the same increase in aggregate demand?
c) Determine one possible combination of government spending increases and tax decreases that would accomplish the same goal.
Lelia LubowitzLv2
6 Feb 2020
