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Consider our standard formula for GDP: Y=C+I+G+X. Additionally note that consumption is given by: C = a+b(Y-T) where T= -20+0.2Y. You also know that : a=150 ; I = 500 ; G = 385 ; X = -7 Furthermore...

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Consider our standard formula for GDP: Y=C+I+G+X. Additionally note that consumption is given by: C = a+b(Y-T) where T= -20+0.2Y. You also know that : a=150 ; I = 500 ; G = 385 ; X = -7 Furthermore you knowthat the marginal propensity to save (MPS)equals 0.4 Calculate the following: a.) Marginal Propensity to Consume b.) Government spending multiplier c.) Tax multiplier d.) Y* e.) Government Deficit
Answered Same Day Dec 21, 2021

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David answered on Dec 21 2021
122 Votes
Consider our standard formula for GDP: Y=C+I+G+X. Additionally note that consumption is
given by:
C = a+b(Y-T) where T= -20+0.2Y, implies t = 0.2
You also know that : a=150 ; I = 500 ; G = 385 ; X = -7
Furthermore you know that the marginal propensity to save (MPS)equals 0.4
Calculate the following:
a.) Marginal Propensity to Consume
Answer:...
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