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Business, 15.11.2019 06:31 madelllinefreeman

Initially, the economy is in long-run equilibrium. the aggregate demand curve then shifts $50 billion to the left. the government wants to change its spending to offset this decrease in demand. the mpc is 0.80. suppose the effect on aggregate demand from a change in taxes is 4/5 the size of the change from government expenditures. there is no crowding out. what should the government do if it wants to offset the decrease in aggregate demand?

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