Score: 0 of 1 pt 11 of 342 complete) HW Score: 4.4196, 1.5 of 34 pts Text Proble

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Score: 0 of 1 pt 11 of 342 complete) HW Score: 4.4196, 1.5 of 34 pts Text Problem 4abc Question Help I * The balanced budget multiplier For both political and macroeconomic reasons, govemments are often reluctant to run budget deficits. Here, we exagnine whether policy changes in G and T that maintain a balanced budget are macroeconomically neutral. Put another way, we examine whether it is possible to affect output through changes in G and T so that the govenment budget remains balanced Using the following formula: (1-G1) where co autonomous consumption and c1 propensity to consume. By how much does Y channge when G increases by one? AY-. (Propertly format your expression using the tools in the palette, Hover over tools to see keyboard shortcuts E.g. a subscript can be created with the character) rnr Enter your answer in the answer box and then click Check Answer Clear All ed ? b. parts remaining Show more

Explanation / Answer

differentiate Y with respect to G

dY/ dG= 1/(1-c1)

when G increases by 1 Y changes by 1/(1-c1).

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