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Stabilize the real gdp to its long run value

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Reference no: EM132506922

1. a. Does the country in the above graph have an unemployment or an inflation problem?

b. If the government chooses to enact policy to stabilize the Real GDP to its long run value, how could they do that? Explain.

2. Suppose that there is a decrease in taxes of $40 billion, and that the tax multiplier is -3. What would be the value of the change in the real GDP?

Reference no: EM132506922

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