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Question: Assume real GDP is $9,000 billion, and disposable income is $6,000 billion. The government cuts personal income taxes by 1% of DI (i.e., $60 billion). As a result, interest rates rise by 2/3%. Assume transfer payments are not changed. Using the equations given in section 7.12, determine how much real GDP changes, and how much I and each of the components of S changes.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93114964

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