Changing taxes instead of government spending

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Reference no: EM131906184

Suppose in an economy household consumption can be described by C = 50 + 0.75(Y - T)

a) If the government wants to boost GDP by $20 billion, how much will they need to increase government spending by?

b) Suppose the government wants to boost GDP by $20 billion but by changing taxes instead of government spending. How much would they need to change taxes by?

c) Suppose the government wants to boost GDP by $20 billion but also wants to not add to any budget deficit. What would they need to change government spending and taxes together by in order to accomplish that.

Reference no: EM131906184

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