More money even if they didnt raise the tax the

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more money, even if they didn't raise the tax. The opposite occurs during a recession. Some governmental transfer changes oppose the economic state. For example, if the economy is expanding the amount on welfare and unemployment compensation decreases. During a recession more people depend on welfare and unemployment compensation.
12. Discuss an important difference between the spending and tax multipliers.
13. Determine the net impact upon the nation's economy that results from equal increases in spending and taxes of $10 billion when the MPC is .8.
Y = 50 The net change in aggregate income/output will be $10 billion 14. Suppose that the MPS = .2 and the government is interested in raising the level of output in the economy by $100 billion. Calculate how much the government would have to spend to achieve this objective.
15. Assume that the government spending multiplier is equal to 5. Calculate the tax multiplier from this information.

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