In an economy where people spend 80% oftheir incomes, the government lowers taxesby $5000. Calculate the change in real GDPthat results.(Be extra careful to follow numericinstructions; round intermediate steps to fourdecimal places and your final answer to two.Use a positive number to denote an increaseand a negative number (with negative sign) todenote a decrease.)

Gross domestic product is a monetary measure of the market value of all the services and final goods…

Answered: In an economy where people spend 80% of…

In an economy where people spend 80% of their incomes, the government lowers taxes by $5000. Calculate the change in real GDP that results.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterD: The Expenditure-output Model

Section: Chapter Questions

Problem 24CTQ: Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on...

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Question

In an economy where people spend 80% of
their incomes, the government lowers taxes
by $5000. Calculate the change in real GDP
that results.
(Be extra careful to follow numeric
instructions; round intermediate steps to four
decimal places and your final answer to two.
Use a positive number to denote an increase
and a negative number (with negative sign) to
denote a decrease.)

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