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Suppose the consumption function is C = $500 billion + 0.9Y

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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?

 

Paper#35009 | Written in 18-Jul-2015

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