It is estimated that a particular economy has a multiplier

Reference no: EM13374821

It is estimated that a particular economy has a multiplier of 2. The marginal propensity to import of the economy is 0.3, while the consumer's marginal propensity to save is 0.2.

(a) Find the marginal tax rate of this economy.

(b) The marginal propensity to import increases from 0.3 to 0.4. Find the new multiplier of the economy and explain why the multiplier has changed.

Reference no: EM13374821

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