An economy is experiencing a high rate of inflation. The government wants to reduce GDP by $80 billion to reduce inflationary pressure. The MPC is .8. By how much should the government raise taxes to achieve its objective?

An economy is experiencing a high rate of inflation. The government wants to reduce GDP by $80 billion to reduce inflationary pressure. The MPC is .8. By how much should the government raise taxes to achieve its objective?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.7P

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