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Macroeconomics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188131Macroeconomics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188131 Exercise 5
CHANGES IN NET TAXES Using the income-expenditure model, graphically illustrate the impact of a $15 billion drop in government transfer payments on aggregate expenditure if the MPC equals 0.75. Explain why it has this impact. What is the impact on the level of real GDP demanded, assuming the price level remains unchanged?
Explanation
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Equilibrium level of GDP:
Government ex...
Macroeconomics 10th Edition by William McEachern
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