Question

when the mpc = 0.75, the desired tax cut for achieving a $300 billion fiscal stimulus is _____.

Answer 1

Based on the marginal propensity to consume, the required tax cut to get a $300 billion stimulus is $400 billion.

How much of a tax cut is needed?

This can be found by the formula:

= Required fiscal stimulus / Marginal propensity to consume

Solving gives:

= 300 / 0.75

= $400 billion

In conclusion $400 billion of tax cuts are needed.

Find out more on marginal propensity to consume at https://brainly.com/question/17930875.

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