Suppose you are an economic adviser to the president, and the economy needs a real GDP increase of $700 billion to reach full- employment equilibrium. If the marginal propensity to consume (MPC) is 0.6 and you are a Keynesian, Congress must increase government spending by $ billion to restore the economy to full employment.
Suppose you are an economic adviser to the president, and the economy needs a real GDP increase of $700 billion to reach full- employment equilibrium. If the marginal propensity to consume (MPC) is 0.6 and you are a Keynesian, Congress must increase government spending by $ billion to restore the economy to full employment.
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 5SQP
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Transcribed Image Text:Suppose you are an economic adviser to the president, and the economy needs a real GDP increase of $700 billion to reach full-
employment equilibrium.
If the marginal propensity to consume (MPC) is 0.6 and you are a Keynesian, Congress must increase government spending by $
billion to restore the economy to full employment.
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