Working with Multipliers Complete the following exercises. 1. Assume the MPC is 0.70 and the government increases spending on public school programs by $20 billion. What is the value of the initial impact on real GDP? What is the value of the total impact on real GDP? 2. Assume the MPC is 0.75 and policymakers have targeted real GDP to decrease by $300 billion. By how much must taxes be increased to achieve this goal?
Working with Multipliers Complete the following exercises. 1. Assume the MPC is 0.70 and the government increases spending on public school programs by $20 billion. What is the value of the initial impact on real GDP? What is the value of the total impact on real GDP? 2. Assume the MPC is 0.75 and policymakers have targeted real GDP to decrease by $300 billion. By how much must taxes be increased to achieve this goal?
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 5.10P
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Working with Multipliers
Help with the following two exercises.
1. Assume the MPC is 0.70 and the government increases spending on public school programs by $20 billion. What is the value of the initial impact on real GDP? What is the value of the total impact on real GDP?
2. Assume the MPC is 0.75 and policymakers have targeted real GDP to decrease by $300 billion. By how much must taxes be increased to achieve this goal?
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