Question 20 Assume that marginal propensity to consume is 0.8 and full-employment level of output is $800 billion. If the actual real GDP is $700 billion, find the change in lump-sum taxes that would bring the economy back to its full-employment level of output (assume taxes and transfer payments do not depend on income and the economy is a closed economy).
Question 20 Assume that marginal propensity to consume is 0.8 and full-employment level of output is $800 billion. If the actual real GDP is $700 billion, find the change in lump-sum taxes that would bring the economy back to its full-employment level of output (assume taxes and transfer payments do not depend on income and the economy is a closed economy).
Chapter8: Aggregate Demand And The Powerful Consumer
Section: Chapter Questions
Problem 3DQ
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Transcribed Image Text:Question 20
Assume that marginal propensity to consume is 0.8 and full-employment level of output is $800 billion.
If the actual real GDP is $700 billion, find the change in lump-sum taxes that would bring the economy
back to its full-employment level of output (assume taxes and transfer payments do not depend on
income and the economy is a closed economy).
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