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Will equilibrium gdp on the demand side rise or fall

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Reference no: EM13321437

Suppose real GDP is $10,000 billion and the basic expenditure multiplier is two. If two tax changes are made at the same time:

a. fixed taxes are raised by $100 billion,

b. the income-tax rate is reduced from 20 percent to 18 percent, will equilibrium GDP on the demand side rise or fall?

Reference no: EM13321437

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