Suppose the government decide to use fiscal policy to close the output gap. The marginal propensity to consume is 0.6 and the output GDP is $150 million Calculate the minimum change in government spending required to close this output GDP

Suppose the government decide to use fiscal policy to close the output gap. The marginal propensity to consume is 0.6 and the output GDP is $150 million Calculate the minimum change in government spending required to close this output GDP

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 4TY

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Suppose the government decide to use fiscal policy to close the output gap. The marginal propensity to consume is 0.6 and the output
GDP is $150 million Çalculate the minimum change in government spending required to close this output GDP

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