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Suppose the government reduces taxes by $20 billion, that there is no crowding out, and that the marginal propensity to consume is 3/4.

1. What is the initial effect of the tax reduction on aggregate demand?

2. The additional effects follow this initial effect as the .

3. What is the total effect of the tax cut on aggregate demand?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9685567

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