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If the MPC in an economy is 0.79, government could shift the aggregate demand curve rightward by $439 at each price level by

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Answer #1

Ans: $116.70

Explanation:

MPS = 1- MPC

= 1 - 0.79

= 0.21

Tax multiplier = MPC / MPS = 0.79 / 0.21 = 3.76

Decrease in taxes by = $439 / 3.76 = $116.76

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