(Answered) 1 assume taxes increase by 300 and government spending

Management Studies

1. Assume taxes increase by $300 and government spending increases by $300. The marginal propensity to consume is 0.75. Calculate the total change GDP.

2. If equilibrium output rises by a total of $400 billion in response to an increase in government spending of $80 billion, what is the marginal propensity to consume?

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