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attashe74 [19]
3 years ago
8

Suppose that the economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering

the use of fiscal policy to ease the recession, but due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. It wants to make up the remainder of the recessionary gap using tax cuts.
If a spending increase of $3 billion is approved and the MPC is 0.6, by how much will taxes need to be reduced to close the remainder of the recessionary gap?
Mathematics
1 answer:
Tju [1.3M]3 years ago
6 0

Answer:

4.66 billion

Step-by-step explanation:

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That's unusual:  repetition:  -1/2 - 1/2.

Did you perhaps mean "Factor -1/2 out of (-1/2)x + 6?

Let's do that.  Let's rewrite 6 as (-1/2)(-12).

Then (-1/2)x + 6       (-1/2)x -(1/2)(-12)
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Hope that's what you wanted.  If not, please try to apply a similar approach to solving this particular problem.

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