An economy is characterized by a spending multiplier of 2.5. Suppose that business pessimism leads to a €30 billion decrease in private investment, while at the same time, the government initiates a public works program, increasing its spending by €20 billion. What is the total net change in the economy's output?
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An economy is characterized by a spending multiplier of 2.5. Suppose that business pessimism leads to a €30 billion decrease in private investment, while at the same time, the government initiates a public works program, increasing its spending by €20 billion. What is the total net change in the economy's output?
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