Homework Help: ECON

Posted by Sam on Thursday, August 13, 2009 at 9:25pm.

If C = 500 + 3/4[GDP- 100], I = 300, G = 400, Xn =- 10 and full employment GDP is 210 less than current GDP, the proper action would be to increase taxes by?

ECON - economyst, Monday, August 17, 2009 at 8:55am
Your MPC = 3/4, which means MPS=1/4. Do a little research on multipliers, especially the taxation multiplier. Hint: the taxation multiplier is (1/MPS)-1.

Take it from here.

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