Suppose that the MPC is 0.6 and that $20 trillion of real GDP is currently being demanded. The government wants to increase real GDP demanded to $16 trillion at the given price level. By how much would it have to increase government spending to achieve this goal?

Suppose that the MPC is 0.6 and that $20 trillion of real GDP is currently being demanded. The government wants to increase real GDP demanded to $16 trillion at the given price level. By how much would it have to increase government spending to achieve this goal?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.11P

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Question

Suppose that the MPC is 0.6 and that $20 trillion of real GDP is currently being demanded. The government wants to increase
real GDP demanded to $16 trillion at the given price level. By how much would it have to increase government spending to
achieve this goal?

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