Assume there is a recessionary gap of $200 billion, and that the government has decided to engage in expansionary fiscal policy to eliminate this recessionary gap. How much must the government spend to get the economy to the long-run equilibrium if the marginal propensity to consume is 0.57 $25 billion
Assume there is a recessionary gap of $200 billion, and that the government has decided to engage in expansionary fiscal policy to eliminate this recessionary gap. How much must the government spend to get the economy to the long-run equilibrium if the marginal propensity to consume is 0.57 $25 billion
Chapter21: Fiscal Policy
Section: Chapter Questions
Problem 20SQ
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Transcribed Image Text:Assume there is a recessionary gap of $200 billion, and that the government has decided to engage in expansionary fiscal policy to
eliminate this recessionary gap.
How much must the government spend to get the economy to the long-run equilibrium if the marginal propensity to consume is 0.57
$25
billion
6th attempt
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