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Suppose the economists observe that an increase

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Suppose the economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion.;a. If these economists ignore the possibility of crowding out, what would they estimate the marginal propensity to consume (MPC) to be?;b. Now suppose the economist allow for crowding out. Would their new estimate of MPC be larger or smaller than their initial one?

 

Paper#27193 | Written in 18-Jul-2015

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