If the MPC = 0.8, what is the multiplier and what is the tax multiplier? If the government's goal was to get rid of a $20 million recessionary gap, what would they have to do in terms of government spending and taxation? Which would be more effective?

If the MPC = 0.8, what is the multiplier and what is the tax multiplier? If the government's goal was to get rid of a $20 million recessionary gap, what would they have to do in terms of government spending and taxation? Which would be more effective?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 3QP

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If the MPC = 0.8, what is the multiplier and what is the tax multiplier? If the government's goal was to get rid of a $20
million recessionary gap, what would they have to do in terms of government spending and taxation? Which would be
more effective?
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Step 2: Determine the multiplier and the tax multiplier

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Step 3: Determine the required government spending and the tax amount

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Step 4: Determine which option would be better

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