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Assume the marginal propensity to consume = .8, and government purchases increase by $.2 Trillion.
1. Potentially, how much will real GDP increase in the short-run after the increase in government purchases?
2. Besides government purchases, what and how much did another spending category increased due to the multiplier described above? Explain?
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Price/Feeder Quantity Demanded Quantity Supplied $300 500 1800 270 600 1700 240 700 1600 210 800 1500 180 1000 1400 150 1100 1300 120 1200 1200 90 1300 1100 60 1400 1000 30 1500 90
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