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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of 02. In the closed economy of Madripoor the GDP is 160 billion dollars and the marginal propensity to save is 0 25 We can infer that 6. Select one answer: O It takes Sokovia an injection of 10 billion dollars to reach a GDP of 200 billion dollars O The multiplier in Madripoor is 6. O The multiplier in Sokovia is 4. O It takes Madripoor an injection of 12 billion dollars to reach a GDP of 200 billion dollars.
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Question 1) a) In panel (a) the curve shifts upward, what could cause this? O Increase in G (govermment spending)O Decrease in HH wealth due to a decrease in housing pricesO An increase in the overall price levelo Areduction in govemment spending (G) b) Using Figure 2, if this economy is currently at Y1 and consumer wealth increases, then___O AD1 will shift to the left, reflecting a decrease in the real GDP at every price level.O AD1 willshift to the right. reflecting an increase in the real GDP at every price level.O an upward movement along the AD1 wiltake place., reflecting an increase in the price level.O a downward movement along the AD1 will take place, reflecting a decrease in the price level.
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