In which country new equilibrium level of income greater

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Question - Two identical countries, Country A and Country B, can each be described by a Keynesian cross model. The MPC is 0.6 in each country. Both countries are worried about the state of the deficit. Country A decides to cut spending by $3 billion, while Country B decides to increase taxes by $3 billion. In which country will the new equilibrium level of income be greater? Explain don't answer by pen paper

Reference no: EM133277860

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