The economy is described by an AD curve P = 250 - 4Y and an AS curve P = 20 + Y, where P is the %3D price level index and Y is the real GDP (in $ billion). On the demand side, the MPC is 0.8, the net tax rate is 25%, and the marginal propensity to import is 0.2. If the government increases its purchases by $5 Billion), what will be the resulting inflation rate

The economy is described by an AD curve P = 250 - 4Y and an AS curve P = 20 + Y, where P is the %3D price level index and Y is the real GDP (in $ billion). On the demand side, the MPC is 0.8, the net tax rate is 25%, and the marginal propensity to import is 0.2. If the government increases its purchases by $5 Billion), what will be the resulting inflation rate

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter15: Fiscal Policy

Section: Chapter Questions

Problem 6SQ

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