3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed? c) Alternatively, how much more government spending would achieve the target?

Economics (MindTap Course List)
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Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government
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QUESTION 3
3. If the AD shortfall is $800 billion and the MPC is 0.8,
a) How large is the desired fiscal stimulus?
b) How large an income tax cut is needed?
c) Alternatively, how much more government spending
would achieve the target?
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Transcribed Image Text:QUESTION 3 3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed? c) Alternatively, how much more government spending would achieve the target? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S Paragraph
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