Suppose that real GDP for an economy is currently 16,000 billion, the government purchases multiplier is 2.2 and the tax multiplier is -1.2. If the government deploys additional spending of 600 billion and cuts taxes by 120 billion, where will GDP end up (in billion)?

MACROECONOMICS
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ISBN:9781337794985
Author:Baumol
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Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.A: Graphical Treatment Of Taxes And Fiscal Policy
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Suppose that real GDP for an economy is currently 16,000 billion, the government
purchases multiplier is 2.2 and the tax multiplier is -1.2.
If the government deploys additional spending of 600 billion and cuts taxes by 120
billion, where will GDP end up (in billion)?
Transcribed Image Text:Suppose that real GDP for an economy is currently 16,000 billion, the government purchases multiplier is 2.2 and the tax multiplier is -1.2. If the government deploys additional spending of 600 billion and cuts taxes by 120 billion, where will GDP end up (in billion)?
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