increases government purchases of goods and services by $50 million. Also assume the absence of taxes, international trade, and changes in the aggregate price level. a. What is the value of the multiplier? b. By how much will real GDP change as a result of the increase in government purchases? c. What would happen to the size of the effect on real GDP if the MPC fell? Explain. d. If we relax the assumption of no taxes, automatic changes in tax revenue as income changes will have what
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