If GDP in Makala is $300, what is the government's budget balance? b) If government spending is increased by the size of the deficit, and the multiplier is 2.5, what is the new level of equilibrium GDP? c) What is the size of the government's deficit at this new level of equilibrium GDP?
If GDP in Makala is $300, what is the government's budget balance? b) If government spending is increased by the size of the deficit, and the multiplier is 2.5, what is the new level of equilibrium GDP? c) What is the size of the government's deficit at this new level of equilibrium GDP?
Chapter1: Making Economics Decisions
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Answer the questions below for the economy of Makala, using the following graph:
a) If
b) If government spending is increased by the size of the deficit, and the multiplier is 2.5, what is the new level of equilibrium GDP?
c) What is the size of the government's deficit at this new level of equilibrium GDP?
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Transcribed Image Text:320
280
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160
120
80
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200 300
400 500
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Real GDP
Government spending/net taxes
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