Assume that government purchases decrease by $10 billion, with other factors held constant,...

Question

Assume that government purchases decrease by $10 billion, with other factors held constant,
including the price level. Calculate the change in the level of real GDP demanded for each of the
following values of the MPC. Then, calculate the change if the government, instead of reducing
its purchases, increased autonomous net taxes by $10 billion.
a. 0.12
. 0.5
c. 0.92
d. 0.4
Answer:
Consumption Multiplier ...

David · Accepted Answer

Assume that government purchases decrease by $10 billion, with other factors held constant, 
including the price level. Calculate the change in the level of real GDP demanded for each of the 
following values of the MPC. Then, calculate the change if the government, instead of reducing 
its purchases, increased autonomous net taxes by $10 billion. 
a. 0.12 
b. 0.5 
c. 0.92 
d. 0.4
Answer:

Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following...

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