If the multiplier is 4 and a change in government spending leads to a cumulative $500 million decrease in aggregate spending, then initially: a. Government spending decreased by $125 million. b. Government spending decreased by $500 million. c. Taxes decreased by $100 million. d. Government spending decreased by $100 million.
If the multiplier is 4 and a change in government spending leads to a cumulative $500 million decrease in aggregate spending, then initially: a. Government spending decreased by $125 million. b. Government spending decreased by $500 million. c. Taxes decreased by $100 million. d. Government spending decreased by $100 million.
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.A: Graphical Treatment Of Taxes And Fiscal Policy
Problem 2TY
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Mexico 25 5
U.S. 20 10
Mexico 25 5
If the multiplier is 4 and a change in government spending leads to a cumulative $500 million decrease in aggregate spending, then initially:
a. Government spending decreased by $125 million.
b. Government spending decreased by $500 million.
c. Taxes decreased by $100 million.
d. Government spending decreased by $100 million.
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