By how much will aggregate demand at current prices shift

Reference no: EM13213164

Suppose the consumption function is C = $400 billion + 0.8Y 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 cut? ( c ) A $50 billion increase in income transfers? What will the cumulative AD shift be for ( d ) The increased G? ( e ) The tax cut? ( f ) The increased transfers?

Reference no: EM13213164

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