Suppose the Malaysian economy is in equilibrium at $1400 billion real GDP with a recessionary gap. Given an MPC of 0.63, the government estimates that a tax cut of $22 billion is just enough to restore full employment. Calculate what is the full-employment real GDP target?
Suppose the Malaysian economy is in equilibrium at $1400 billion real GDP with a recessionary gap. Given an MPC of 0.63, the government estimates that a tax cut of $22 billion is just enough to restore full employment. Calculate what is the full-employment real GDP target?
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 6SQP
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Suppose the Malaysian economy is in equilibrium at $1400 billion real GDP with a recessionary gap. Given an MPC of 0.63, the government estimates that a tax cut of $22 billion is just enough to restore full employment. Calculate what is the full-employment real GDP target?
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