Business, 17.12.2019 04:31 ublockmon786

Initially, the economy is in long-run equilibrium. the aggregate demand curve then shifts $80 billion to the left. the government wants to change spending to offset this decrease in demand. the mpc is 0.75. suppose the effect on aggregate demand of a tax change is 3/4 as strong as the effect of a change in government expenditure. there is no crowding out and no accelerator effect. what should the government do if it wants to offset the decrease in real gdp?

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Initially, the economy is in long-run equilibrium. the aggregate demand curve then shifts $80 billio...