Exhibit 20-4 Macro AD/AS Model Price level (CPI) 0 4 8 increased by $1.6 million O decreased by $1.6 trillion O increased by $20 trillion O increased by $ 20 million LRAS AD₁ 12 Real GDP (trilions of dollars) SRAS 20 AD₂ As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 50. Using discretionary fiscal policy, federal government spending in order to restore the economy from E 1 to full employment. should be
Exhibit 20-4 Macro AD/AS Model Price level (CPI) 0 4 8 increased by $1.6 million O decreased by $1.6 trillion O increased by $20 trillion O increased by $ 20 million LRAS AD₁ 12 Real GDP (trilions of dollars) SRAS 20 AD₂ As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 50. Using discretionary fiscal policy, federal government spending in order to restore the economy from E 1 to full employment. should be
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 3TY
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Question
Ab 29
Economics
![Exhibit 20-4 Macro AD/AS Model
Price level
(CPI)
0
4
8
O increased by $1.6 million
decreased by $1.6 trillion
increased by $20 trillion
increased by $20 million
LRAS
AD₁
12 16
Real GDP
(trillions of dollars)
SRAS
20
AD₂
As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 80. Using discretionary fiscal policy, federal government spending
should be
in order to restore the economy from E1 to full employment.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2a39ead3-bc46-40d5-97e4-8f7630fa8073%2F0c1fba68-d77b-4116-a983-a29ec2ff1203%2Fowebd6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exhibit 20-4 Macro AD/AS Model
Price level
(CPI)
0
4
8
O increased by $1.6 million
decreased by $1.6 trillion
increased by $20 trillion
increased by $20 million
LRAS
AD₁
12 16
Real GDP
(trillions of dollars)
SRAS
20
AD₂
As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 80. Using discretionary fiscal policy, federal government spending
should be
in order to restore the economy from E1 to full employment.
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