Assume that there is no accelerator affect. the mpc = 3/4. the government increases both expenditures and taxes by $600. the effect of taxes on aggregate demand is 3/4 the size of that created by government expenditures alone. the crowding out effect is 1/5 as strong as the combined effect of government expenditures and taxes on aggregate demand. how much does aggregate demand shift by?

Biochemical corp. requires $600,000 in financing over the next three years. the firm can borrow the funds for three years at 10.80 percent interest per year. the ceo decides to do a forecast and predicts that if she utilizes short-term financing instead, she will pay 7.50 percent interest in the first year, 12.15 percent interest in the second year, and 8.25 percent interest in the third year. assume interest is paid in full at the end of each year. a)determine the total interest cost under each plan. a) long term fixed rate: b) short term fixed rate: b) which plan is less costly? a) long term fixed rate plan b) short term variable rate plan