Business
Business, 06.07.2021 17:30, viicborella

Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-third as strong as the multiplier effect, and if the MPC equals 0.6, then by how much do government purchases have to increase in order to offset the $50 billion leftward shift?

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Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 bill...

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