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Consider a Multiplier Model in Which Autonomous Expenditures Are $2,250

Question 19

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Consider a multiplier model in which autonomous expenditures are $2,250 billion and the mpe is 0.8.Suppose that the President asks you to explain to him the impact that a $50 billion cut in government spending will have on the economy.Provide a mechanistic and an interpretive explanation.

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A mechanistic : You would tell the Presi...

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