Suppose Kittyville's full-employment GDP is $600 billion, and the current equilibrium GDP is $400 billion. The MPC in a recessionary expenditure gap. To correct this gap, Kittyville this economy equals 0.90. Kittyville's economy has hires an economist, Kittyzen Keynes, who suggests increasing government spending or decreasing taxes. Suppose Kittyville decides to change government spending under Keynes' advice. By how much must government spending change to correct for the expenditure gap (rounded to nearest billion dollars)? $ Incorrect billion dollars - Y Suppose Kittyville instead decides to change taxes under Keynes' advice. By how much must taxes change to correct for the

Suppose Kittyville's full-employment GDP is $600 billion, and the current equilibrium GDP is $400 billion. The MPC in a recessionary expenditure gap. To correct this gap, Kittyville this economy equals 0.90. Kittyville's economy has hires an economist, Kittyzen Keynes, who suggests increasing government spending or decreasing taxes. Suppose Kittyville decides to change government spending under Keynes' advice. By how much must government spending change to correct for the expenditure gap (rounded to nearest billion dollars)? $ Incorrect billion dollars - Y Suppose Kittyville instead decides to change taxes under Keynes' advice. By how much must taxes change to correct for the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose Kittyville's full-employment GDP is $600 billion, and the current equilibrium GDP is $400 billion. The MPC in
this economy equals 0.90. Kittyville's economy has
a recessionary
expenditure gap. To correct this gap, Kittyville
increasing
hires an economist, Kittyzen Keynes, who suggests
government spending or decreasing taxes.
Suppose Kittyville decides to change government spending under Keynes' advice. By how much must government
spending change to correct for the expenditure gap (rounded to nearest billion dollars)?
Incorrect
$
Suppose Kittyville instead decides to change taxes under Keynes' advice. By how much must taxes change to correct for the
expenditure gap (rounded to nearest billion dollars)?
billion dollars
Incorrect
billion dollars

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