Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45 %. There are no taxes and no foreign trade. Currently, Canada has a recessionary gap, the governments aim is to get actual output to increase by 220 billion dollars. How much of a tax cut do they need to have to achieve the overall increase in output of 220 billion dollars?

ENGR.ECONOMIC ANALYSIS
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Consider the economy of Canada. Its households spend 55% of increases in
their income and saves 45 %. There are no taxes and no foreign trade.
Currently, Canada has a recessionary gap, the governments aim is to get
actual output to increase by 220 billion dollars. How much of a tax cut do
they need to have to achieve the overall increase in output of 220 billion
dollars?
Transcribed Image Text:Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45 %. There are no taxes and no foreign trade. Currently, Canada has a recessionary gap, the governments aim is to get actual output to increase by 220 billion dollars. How much of a tax cut do they need to have to achieve the overall increase in output of 220 billion dollars?
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