Suppose the consumption function is C = $800 billion + 0.8Y

and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with

Instructions: Enter your responses as a whole number.

a. A $50 billion increase in government purchases?

$

billion

b. A $50 billion tax cut?

$

billion

c. A $50 billion increase in income transfers?

$

billion

What will the cumulative AD shift be for

d. The increased government spending?

$

billion

e. The tax cut?

$

billion

f. The increased transfers?

$

billion