In 2009, the US Federal government cut taxes by approximately $300 billion, increased government spending by approximately $300 billion, and increased transfer payments by approximately $200 billion. Answer the following questions, assuming the marginal propensity to consume was 0.75. What was the maximum change in GDP from the government transfers? Show your work.   If these numbers were accurate, what was the maximum change in GDP from the entire stimulus package? Show your work.

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Q: In 2009, the US Federal government cut taxes by approximately $300 billion, increased government…

A:

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