In: Economics
Suppose that the MPC in a country is 0.7.
Complete the following table by calculating the change in GDP predicted by the multiplier process given each fiscal policy change listed.
Fiscal Policy Change |
Resulting Change in GDP |
---|---|
(Billions of dollars) |
|
$100 billion increase in government spending (G) | |
$100 billion decrease in taxes (T) | |
$100 billion increase in government spending (G) and $100 billion increase in taxes (T) |