Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession Instructions: In part a round your answers to 2 decimal places Enter your answers as positive numbers in part & enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 10.00 bilion How large a tax cut would be needed to achieve the same increase in aggregate demand? 13 bilion

MACROECONOMICS
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Chapter11: Managing Aggregate Demand: Fiscal Policy
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Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession
Instructions: In part around your answers to 2 decimal places. Enter your answers as positive numbers in part & enter your answers
as whole numbers.
a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 billion?
S
10.00 bilion
How large a tax cut would be needed to achieve the same increase in aggregate demand?
$
13 billion
b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal
without changing the amount of outstanding debt e, maintaining the budget balance at its current value)
Increase spending by
Increase taxes by
billion
bilion
Save & Ext
Transcribed Image Text:Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession Instructions: In part around your answers to 2 decimal places. Enter your answers as positive numbers in part & enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 billion? S 10.00 bilion How large a tax cut would be needed to achieve the same increase in aggregate demand? $ 13 billion b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt e, maintaining the budget balance at its current value) Increase spending by Increase taxes by billion bilion Save & Ext
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