Please explain and solve the problem below. Assume that the full-employment level of output is $600 and the price level associated with full-employment output is 100.
Please explain and solve the problem below.
Assume that the full-employment level of output is $600 and the price level associated with full-employment output is 100. Also assume that the economy’s current level of output is $550 and at the price level of 100 current aggregate demand is $465. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.9, then it should reduce taxes by?
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