Discover the answers you need at Westonci.ca, where experts provide clear and concise information on various topics. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

If the tax multiplier is 1. 5 and a $200 billion tax increase is implemented, what is the change in gdp, holding all else constant? (assume the price level stays constant. ).

Sagot :

Based on the information given  the change in GDP, holding all else constant is a $300 billion increase in GDP.

Using this formula

Change in GDP=Tax increase× Tax multiplier

Where:

Tax increase=$200 billion

Tax multiplier=1.5

Let plug in the formula

Change in GDP=$200 billion×1.5

Change in GDP=$300 billion increase

Inconclusion the change in GDP, holding all else constant is a $300 billion increase in GDP.

Learn more here:https://brainly.com/question/9991208

Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.