Given the basic keynesian model-as a starting point

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Given the basic Keynesian model-as a starting point: Y = C + I + G C = a + b Yd I = f (i) I ? f (Y) ie., MPI* = 0 G = Go Tx = Txo * MPI to represent marginal propensity of invest (NOT import) Assume S = -5 + .25Y, then a $10 billion increase in government spending financed by a $10 billion tax increase would: (Think and apply what you know) (Points : 3) have no effect on income. lower the level of income by $30 billion. raise the level of income by $10 billion. raise the level of income by $40 billion.

Reference no: EM131161971

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