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Fiscal stimulus and multiplier effect.

a) If the desired fiscal stimulus is $20 billion and the desired AD increase is $50 billion, we can conclude that the MPC is:

b) To eliminate an AD shortfall of $120 billion when the economy has an MPC of 0.8, the government should decrease taxes by:

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M920871

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