Society decided to reduce consumption

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Reference no: EM139306

Q1. Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?

Q2. A group of concerned citizens has established a trust fund that pays 6% interest, compounded monthly, to preserve a historical building by providing annual maintenance funds of $35,000 forever. Compute the capitalized equivalent amount for these building maintenance expenses.

Q3. Assume that the society decided to reduce consumption also increase investment. Explain how would this change effect economic growth?

Reference no: EM139306

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