Suppose the consumption function is C=$800 billion + 0.8 Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Instructions: Enter your responses as a whole number. a. a $100 billion increase in government purchases? $ billion b. a $100 billion tax cut? $ billion c. a $100 billion increase in income transfers? $ billion
Suppose the consumption function is C=$800 billion + 0.8 Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Instructions: Enter your responses as a whole number. a. a $100 billion increase in government purchases? $ billion b. a $100 billion tax cut? $ billion c. a $100 billion increase in income transfers? $ billion
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 6.13P
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Step 1: Define aggregate demand
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