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Suppose that real GDP is currently $17.1 trillion, potential GDP is $17.4 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.6.
a. Holding other factors constant, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP?
b. Holding other factors constant, by how much will taxes have to be cut to bring the economy to equilibrium at potential GDP?
c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP.
a pure monopolist sells output for 4.00 per unit at the current level of production. at this level of output the
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Draw the decision tree for this problem without the probability values and compute the revised probabilities needed to complete the decision, and place these values in the decision tree.
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