a. If GDP is $800 and government spending is G₁, the size of Motak's budget deficit is $ b. If government spending is decreased by the size of the deficit in part (a), draw the new curve labelled G₂ in the graphing area above. c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $ d. Motak's deficit at this new level of equilibrium GDP is $ billion. billion. billion.
a. If GDP is $800 and government spending is G₁, the size of Motak's budget deficit is $ b. If government spending is decreased by the size of the deficit in part (a), draw the new curve labelled G₂ in the graphing area above. c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $ d. Motak's deficit at this new level of equilibrium GDP is $ billion. billion. billion.
Chapter11: Fiscal Policy And The Federal Budget
Section: Chapter Questions
Problem 1QP
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