A decrease in government purchases of $2 billion leads to an initial $1.1 billion decrease in withdrawals. a. In this case MPW is MPC is , and the spending multiplier in this economy is . Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places. b. With this change in government purchases the AD curve shifts to the (Click to select) v by $ of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer. billion. Enter your response for the size C. As a result of this shift the equilibrium price level will (Click to select) v and equilibrium real output will (Click to select) v
A decrease in government purchases of $2 billion leads to an initial $1.1 billion decrease in withdrawals. a. In this case MPW is MPC is , and the spending multiplier in this economy is . Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places. b. With this change in government purchases the AD curve shifts to the (Click to select) v by $ of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer. billion. Enter your response for the size C. As a result of this shift the equilibrium price level will (Click to select) v and equilibrium real output will (Click to select) v
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.4P
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