Question 1150421


Decrease in taxes is $3 billion. Then the planned expenditures would increase by $3 billion as a result of tax decrease. The decrease in taxes is the finances increase in expenditures and as a result the level of income increases by $3 billion.

so,

In the Keynesian-cross model, if the MPC equals 0.75, then a $3 billion decrease in taxes increases planned expenditures by __$3 billion____ and increases the equilibrium level of income by ____$3 billion_____ .