Suppose the consumer function is

C = $700 billion + 0.8Y

And the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with

Instructions: Interview responses rounded to the nearest 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

What will the cumulative AD shift be for

d.The increased government spending? $ __________ billion

e.The tax cut? $ ____________ billion

f.The increased transfers? $ ___________ billion