Suppose the consumption function is C= $400billion + 0.9 Y and the government wants tostimulate the economy. By how much willaggregate demand at current prices shift initially(before multiplier effects) withInstructions: Enter your response as a wholenumber.(a) A $60 billion increase in governmentpurchases? $ billionInstructions: Enter your responses rounded to onedecimal place.(b) A $60 billion tax cut? $ billion(c) A $60 billion increase in income transfers? $billionWhat will the cumulative AD shift be for(d) The increased government spending? $ billion(e) The tax cut? $ billion

Aggregate demand is a measurement of the total amount of demand for all finished goods and services…

Answered: illion + 0.9 Y and the government wants…

illion + 0.9 Y and the government wants to timulate the economy. By how much will ggregate demand at current prices shift initially pefore multiplier effects) with

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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Question

Suppose the consumption function is C= $400
billion + 0.9 Y and the government wants to
stimulate the economy. By how much will
aggregate demand at current prices shift initially
(before multiplier effects) with
Instructions: Enter your response as a whole
number.
(a) A $60 billion increase in government
purchases? $ billion
Instructions: Enter your responses rounded to one
decimal place.
(b) A $60 billion tax cut? $ billion
(c) A $60 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

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