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Business, 13.05.2020 03:57 laureneb0403

Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $100 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-half as strong as the multiplier effect, and if the MPC equals 0.8, then by how much do government purchases have to increase in order to offset the $100 billion leftward shift

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Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $100 bil...
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