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make sure to address the following issues/questions in your response: 1) identify and quantify the existing output gap, 2) identify and quantify the appropriate change in government spending for policy 1, 3) identify and quantify the appropriate changes in taxes for policy 2, and 4) identify and quantify the appropriate changes in government spending and taxes for policy 3.

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The multiplier effect is a theory that claims that government expenditure on economic stimulus promotes private spending, which further stimulates the economy.

What Is the Multiplier Effect?

  • The multiplier effect is a theory that claims that government expenditure on economic stimulus promotes private spending, which further stimulates the economy.
  • The basic tenet of the theory is that government expenditure increases household income, which boosts consumer spending. The economy is then further stimulated as a result of rising business revenues, output, capital expenditures, and employment.
  • The multiplier effect should eventually result in a rise in the overall gross domestic product (GDP) that is higher than the increase in government spending, according to theory.  
  • A higher national income is the end result.

To Learn more About  multiplier effect refer to:

https://brainly.com/question/13440595

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