Aggregate demand at current prices


Suppose the consumption function is C = $500 billion + 0.9Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with

(a) A $50 billion increase in government purchases?

(b) A $50 billion tax cuts?

(c) A $50 billion increase in income transfer?

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Business Management: Aggregate demand at current prices
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