Suppose the economy is in a recession. policymakers estimate that aggregate demand is $100 billion short of the amount necessary to generate the long-run natural level of output. that is, if aggregate demand were shifted to the right by $100 billion, the economy would be in long-run equilibrium. a. if the federal government chooses to use fiscal policy to stabilize the economy, by how much should they increase government spending if the marginal propensity to consume (mpc) is 0.75 and there is no crowding out?

Answercredited to inventory;

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