Question: A decrease in government purchases of $16 billion leads to an initial $8.8 billion decrease in withdrawals. a. In this case MPW is , MPC

A decrease in government purchases of $16 billion leads to an initial $8.8 billion decrease in withdrawals.

a. In this case MPW is , MPC is , and the spending multiplier in this economy is . Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places.

b. With this change in government purchases the AD curve shifts to the (Click to select) left right by $ billion. Enter your response for the size of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer.

c. As a result of this shift the equilibrium price level will (Click to select) decrease increase and equilibrium real output will (Click to select) decrease increase .

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