Determine the net effect of raising taxes and govt spending

Reference no: EM13204566

Assume an open, mixed economy (C+I+G+X=real GDP) and an MPS of .4. Would it be expansionary, contractionary, or useless to the economy to increase government expenditures by $30 billion and also increase taxes by $30 billion. (Hint: you have to calculate the multiplier and apply it appropriately and determine the net effect of raising taxes and government spending by the same amount)

Reference no: EM13204566

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Determine the net effect of raising taxes and govt spending : Assume an open, mixed economy (C+I+G+X=real GDP) and an MPS of .4. Would it be expansionary, contractionary, or useless to the economy to increase government expenditures by $30 billion and also increase taxes by $30 billion.

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