Suppose the consumption function is C = $500 billion + 0.55Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with
Instructions: Round your answers to 1 decimal place.
a) A $90 billion increase in government purchases?
$ billion
b) A $90 billion tax cut?
$ billion
c) A $90 billion increase in income transfers?
$ billion
What will the cumulative AD shift be for
d) The increased G?
$ billion
e) The tax cut?
$ billion
f) The increased transfers?
$ billion