### What would be the total effect on the economy of action

##### Reference no: EM131082101

Assume that the MPC=0.6 for every consumer in the economy. You have just received a tax cut of \$20000. How this action by the government will affect your spending plans? What would be the total effect on the economy of this action? (Assume that t=0, m=0). What would be the total effect ift =0.2 and m=0.08. Are your answers the same for Problems 7 and 8? Why or why not?

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