Determine one possible combination of government spending

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Reference no: EM13155222

Assume that a hypothetical economy with an MPC of 0.9 is experiencing a severe recession.

By how much would government spending have to rise to shift the aggregate demand curve rightward by $50 billion?

Instructions: Round your answer to two decimal places.

$ billion

How large a tax cut would be needed to achieve the same increase in aggregate demand?

Instructions: Round your answer to two decimal places. Enter a positive value.

$ billion

Determine one possible combination of government spending increases and tax increases that would accomplish the same goal.

Increase spending by $ billion and increase taxes by $ billion.

Reference no: EM13155222

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