microeconomics. Arthur spends his income on pie and whipped cream. He views pie as a good but is neutral about cream, in that he doesn’t care if he…
September 11, 2020
Would expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and describe/sketch
September 11, 2020

a) Two countries are in a recession. Country A has an MPC of 0.8 and Country B has an MPC of 0.6. In which country will government spending have the greatest impact?

b) If there is a recessionary gap of $100 billion, should the government increase spending by $100 billion to close the gap? Why or why not?

KM
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