Instructions: in parts a and b, round your answer to two decimal places. In part entering a negative number include a minus sign. a. Suppose the marginal propensity to consume (MPC) for a nation is 0.97. What is the tax multiplier for this nation? b. What is the tax multiplier for this nation if a $200 increase in taxes reduces real GDP by-$1800? c. How much will real GDP change if the tax multiplier is -2.5 and taxes are reduced by $300?
Instructions: in parts a and b, round your answer to two decimal places. In part entering a negative number include a minus sign. a. Suppose the marginal propensity to consume (MPC) for a nation is 0.97. What is the tax multiplier for this nation? b. What is the tax multiplier for this nation if a $200 increase in taxes reduces real GDP by-$1800? c. How much will real GDP change if the tax multiplier is -2.5 and taxes are reduced by $300?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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