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Business, 19.03.2020 19:55 nanda22

Initially, the economy is in long-run equilibrium. The aggregate demand curve then shifts $80 billion to the left. The government wants to change spending to offset this decrease in demand. The MPC is 0.75. Suppose the effect on aggregate demand of a tax change is 3/4 as strong as the effect of a change in government expenditure. There is no crowding out. What should the government do if it wants to offset the decrease in real GDP

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Initially, the economy is in long-run equilibrium. The aggregate demand curve then shifts $80 billio...
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