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w much does aggregate demand need to change to restore the economy to its long-run equilibrium? ыlon he MPC is 0.6, how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Dose instead that the MPC is 0.5.

w much does aggregate demand need to change to restore the economy to its long-run equilibrium? ыlon he MPC is 0.6, how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Dose instead that the MPC is 0.5.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $1 billion b. If the MPC is 0.6, how much do taxes need to change to shift aggregate demand by the amount you found in part a? $1 billion Suppose instead that the MPC is 0.5. c. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $[ billion and taxes need to change by $[ billion.
Transcribed Image Text:Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $1 billion b. If the MPC is 0.6, how much do taxes need to change to shift aggregate demand by the amount you found in part a? $1 billion Suppose instead that the MPC is 0.5. c. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $[ billion and taxes need to change by $[ billion.
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Fiscal Policy 150 LRAS 140 AS 130 120 110 100 90 80 70 60 AD 50 40 AD, 30 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Price Level
Transcribed Image Text:The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Fiscal Policy 150 LRAS 140 AS 130 120 110 100 90 80 70 60 AD 50 40 AD, 30 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Price Level
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