Assume that a hypothetical economy with an MPC of 0.75 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. $ [removed] 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. $ [removed] billion
Determine one possible combination of government spending increases and tax increases that would accomplish the same goal.
Increase spending by $ [removed] billion and increase taxes by $ [removed] billion.
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