Aggregate demand at current prices shift initially

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Reference no: EM13742718

The consumption function is C = $400 billion + 0.6Y 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 $20 billion increase in government purchase? ? billion

b) a $20 billion tax cut = ? billions

c) a $20 billion increase in income transfers = ? billion

What will the cumulative AD shift be for:

d) the increased govenerment spending = ? billion

e) the tax cut = ? billion

f) the increased transfers = ? billion

Reference no: EM13742718

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