Ask Question
10 July, 08:48

If the AD shortfall is $100 billion and the MPC is 0.8, Instructions: Enter your responses rounded to one decimal place. a. How large is the desired fiscal stimulus? $ 20 billion b. How large an income tax cut is needed? $ billion c. Alternatively, how much more government spending would achieve the target? $ billion

+5
Answers (1)
  1. 10 July, 10:51
    0
    Multipier is 1 / (1-.8) = 5

    a. AD Shortfall/Multiplier = 100/5 = 20 billion

    b. FS/MPC = 20/.8 = 25 billion

    c. 20 billion
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “If the AD shortfall is $100 billion and the MPC is 0.8, Instructions: Enter your responses rounded to one decimal place. a. How large is ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers