The economy is in a recession. The government enacts a policy to increase the real GDP by $10 bilion. The MPS is 02. Assuming that the aggregate supply curve is horizontal across the range of GDP being considered, by how much should the government change spending or taxes in order to achieve its objective? Show yout calculations.

The economy is in a recession. The government enacts a policy to increase the real GDP by $10 bilion. The MPS is 02. Assuming that the aggregate supply curve is horizontal across the range of GDP being considered, by how much should the government change spending or taxes in order to achieve its objective? Show yout calculations.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 8P

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