Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary fiscal policy as (1) cutting taxes by $10 billion, then by how much would total spending increase over an infinite period? (2) spending $10 billion, then by how much would total spending increase over an infinite period?
Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary fiscal policy as (1) cutting taxes by $10 billion, then by how much would total spending increase over an infinite period? (2) spending $10 billion, then by how much would total spending increase over an infinite period?
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 20SQ
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Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary fiscal policy as
(1) cutting taxes by $10 billion, then by how much would total spending increase over an infinite period?
(2) spending $10 billion, then by how much would total spending increase over an infinite period?
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