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

Question:

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 cut?

What will the cumulative AD shift be for

(d) The increased G?

(e) The tax cut?

(f) The increased transfers?

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The Macro Economy Today

ISBN: 978-1259291821

14th edition

Authors: Bradley R. Schiller, Karen Gebhardt

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Question Posted: May 04, 2018 12:55 AM

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

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a 50 billion b 45 billion c 45 billion d 500 billion e 450 billon f 450 billon Feedback a A 50 ...View the full answer

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