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Assume the economy is currently in equilibrium at its full-employment level of output, the money market is in equilibrium, and the MPC = 0.75.


a. Suppose there is an increase in government spending that causes aggregate demand to increase by $16 billion. Show the increase in aggregate demand on the graph.


Instructions: Use the tool provided "Aggregate Demand" to plot the new aggregate demand curve. Use the tool provided "New GDP" to plot the new equilibrium.


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Assume the economy is currently in equilibrium at its fullemployment level of output the money market is in equilibrium and the MPC 075a Suppose there is an inc class=

Respuesta :

In the MPC, when there is an increase in government spending that causes aggregate demand to increase by $16 billion, the aggregate demand will shift to the right.

What is MPC?

The marginal propensity to consume is the proportion of an increase in pay that a consumers sleds on consumption.

In this case, when there is an increase in government spending that causes aggregate demand to increase by $16 billion, the aggregate demand will shift to the right.

Learn more about MPC on:

https://brainly.com/question/25821146

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