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Homework answers / question archive / Suppose the government of Nettland wants to finance a $1 million increase in government spending by raising taxes
Suppose the government of Nettland wants to finance a $1 million increase in government spending by raising taxes. The tax increase decreases total consumers' disposable incomes by million. If consumer spending changes by 80% of the change in consumers' income, then the net effect of the increase in government spending will be a in aggregate expenditure.
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