Two Identical Countries, Country a and Country B, Can Each

question 77

Essay

Two identical countries, Country A and Country B, can each be described by a Keynesian-cross model. The MPC is 0.7 in each country. Country A decides to increase spending by $2 billion, while Country B decides to cut taxes by $2 billion. In which country will the new equilibrium level of income be greater?

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Definitions:

Mammography

An X-ray examination of the breast, used to detect and diagnose breast diseases like cancer.

Compressed

The state of being pressed into less space or condensed, often used in the context of data or materials.

Radiation

The emission and diffusion of rays; a product of X-ray and radium.

Wilhelm Konrad Roentgen

A German physicist who discovered X-rays in 1895, for which he received the first Nobel Prize in Physics in 1901.