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Determine the value of the multiplier

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Reference no: EM1370532

Assume that the MPC is 0.8, while the sum of planned investment, government purchases, and net exports is $500 billion. Suppose also that the government budget is in balance.

What is the sum of saving and net taxes when desired spending equals real GDP? Explain.

What is the value of the multiplier?

Explain why the multiplier is related to the slope of the consumption function.

 

Reference no: EM1370532

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