Question: Suppose the consumption function C = $500 billion + 0.9Y and the government wants to stimulate the economy. By how much will aggregated demand at

Suppose the consumption function C = $500 billion + 0.9Y and the government wants to stimulate the economy. By how much will aggregated demand at current prices shift initially (before multiplier effect) with:

a) A $50 billion increase. in government purchases?

b) A $50 billion tax cut?

c) A $50 billion increase in income transfers?

What will the cumulative AD shift be for:

d) the increased G?

e) the tax cut?

f) the increased transfers?

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