Suppose the consumption function is C = $500 billion + 0.9Y and the government wants to stimulate

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Suppose the consumption function is C = $500 billion + 0.9Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with
(a) A $50 billion increase in government purchases?
(b) A $50 billion tax cuts?
(c) A $50 billion increase in income transfer?

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The Macro Economy Today

ISBN: 978-1259291821

14th edition

Authors: Bradley R. Schiller, Karen Gebhardt

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