Working with Multipliers Complete the following exercises. 1. Assume the MPC is 0.70 and the government increases spending on public school programs by $20 billion. What is the value of the initial impact on real GDP? What is the value of the total impact on real GDP? 2. Assume the MPC is 0.75 and policymakers have targeted real GDP to decrease by $300 billion. By how much must taxes be increased to achieve this goal?

Working with Multipliers Complete the following exercises. 1. Assume the MPC is 0.70 and the government increases spending on public school programs by $20 billion. What is the value of the initial impact on real GDP? What is the value of the total impact on real GDP? 2. Assume the MPC is 0.75 and policymakers have targeted real GDP to decrease by $300 billion. By how much must taxes be increased to achieve this goal?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the government spends 10 million and the multiplier is 5, then real GDP will increase by: Group of answer choices 10 million. 20 million. 100 million. 50 million.
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