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What is the new equilibrium real gdp

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Reference no: EM131092522

Suppose that Equilibrium Real GDP is $20,000 while Potential Real GDP is $15,000. The marginal propensity to consume is 9/10and that government decides to lower taxes by $1,000. To pay for this, it lowers government purchases by $1,000. As a result of these two changes, what is the new Equilibrium Real GDP?

Reference no: EM131092522

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