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Suppose the consumption function isc 400 billion 08y and

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Reference no: EM13377499

Suppose the consumption function is

c = $400 billion + 0.8y and the government wants to stimulate the economy. By how much will aggeregate 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?

Reference no: EM13377499

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