Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase...
Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase GDP by 30 percent, and they want to change taxes and government spending by equal amounts, how much would government spending and taxes each need to increase?
Group of answer choices
$1,000
$300
$3,000
$750
Homework Answers
Answer : $3000
Increase in gdp = 10000*0.3= 3000
When government spending and taxes need to change by same amount budget multiplier is 1.
So government spending and taxes must increase by increase in gdp needed.
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Assume that GDP = $10,000 and the MPC = 0.75. If policy makers
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