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
Instructions: Enter your response as a whole number.
(a) A $50 billion increase in government purchases? $......... billion
Instructions: Enter your responses rounded to one decimal place.
(b) A $50 billion tax cut? $....... billion
(c) A $50 billion increase in income transfers? $........ billion
What will the cumulative AD shift be for
(d) The increased government spending? $........ billion
(e) The tax cut? $........ billion
(f) The increased transfers? $......... billion