Ask Question
7 August, 04:42

Suppose the consumption function is c = $500 billion + 0.9y and the government wants to stimulate the economy. by how much will aggregate demand at current prices shift initially (before multiplier effects) with

+4
Answers (1)
  1. 7 August, 04:45
    0
    Answer: Spending Multiplier=1/1-0.9=10 a. the GDP will increase = 10x50=$500 billion Tax multiplier = 0.9/1-0.9=9 b. the GDP will increase = 50 x 9=$450billion c. nothing will happen. Transfer payment will not affect GDP.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Suppose the consumption function is c = $500 billion + 0.9y and the government wants to stimulate the economy. by how much will aggregate ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers