A state policymaker is thinking about reducing taxes to boost the local GDP. However, she is concerned about negative effects on the budget and orders a survey to gauge her voter’s consumption behaviour. The relevant information is summarized below.  

C = 600 + 0.8(DI)

Multiplier:

1 / 1−mpc

14. What is the size of the multiplier?

15. Assume she goes through with her plan and reduces taxes. As a consequence, she generates a tax revenue of T=100. By how much will consumption increase? By how much Savings?

16. Use your results from Q14 and Q15 to calculate the eventual increase in GDP resulting from the tax policy.

Hi, These question is about flooding attack. I need more detail about it.

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