Tutorial Chapter 34(2) Fiscal

Tutorial Chapter 34(2) Fiscal - 1(1-3/4)=4 total...

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Tutorial Chapter 34 Fiscal Question 1 the spending multiplier= 1/(1-4/5)=5 government spending= 400/5=80 Question 2 a) 20 billion x 3/4 = 15billion b) first: 20billion x 3/4 =15billion second: 15billion x 3/4 = 11.25 billion third: 11.25billion x 3/4 = 8.44 billion
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Unformatted text preview: 1/(1-3/4)=4 total effect=15billion x 4=60 billion c) 20 billion x 4 = 80 billion d) government needs to increase tax Question 3- AD increase, MD increase, interest increase- AD decrease- MS increase, AD increase...
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