(Answered) Sppose the consumption function isnbspcnbsp 500 billion

Management Studies

Suppose the consumption function is C = $500 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? $ billion

(b) A $50 billion tax cut? $ 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

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