Demonstrate the effects of an increase in government

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Assuming that the economy is below full employment, demonstrate the effects of an increase in government spending of $300 versus a decrease in taxes of $300 on output/income and interest rates. Assume that the MPC in the economy is .65. Show results graphically (AE/Y, S=I(i), and S=I(y)) for both fiscal policies.

Reference no: EM131425999

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