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3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed?

3. If the AD shortfall is $800 billion and the MPC is 0.8,

a) How large is the desired fiscal stimulus?

b) How large an income tax cut is needed?

c) Alternatively, how much more government spending would achieve the target?

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