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March 27, 2017

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Increased government
purchases, with taxes held constant, can eliminate a contractionary gap.
How could a tax cut achieve the same result? Would the tax cut have to
be larger than the increase in government purchases? Why or why not?

  • macroeconomics - ,

    Do a little research, then take a shot. What do you think?

    Hint: be sure to read up on the money multiplier.

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