Problem on-government purchases multiplier

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Question: Assume that the government purchases multiplier is 1.8 and the tax multiplier is -1.2. Suppose the government wants to offset a $73 billion short-run decrease in output by increasing both G and T, but is determined to keep its budget position unchanged (i.e., any change in G is exactly offset by an equal change in T). In this case, the government should increase G and T by (express your answer in billions of dollars, rounded to the nearest whole number): (there should only be one answer - G and T need to increase by the same amount!)

Reference no: EM131774694

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