The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to increase to restore the economy to its long-run equilibrium?      $  billion b. If the MPC is 0.75, how much does government purchases need to increase to shift aggregate demand by the amount you found in part a?      $  billion Suppose instead that the MPC is 0.8. c. How much does aggregate demand and government purchases need to increase to restore the economy to its long-run equilibrium?      Aggregate demand needs to increase by $ billion and government purchases need to increase by $ billion.    PrevQuestion 1 of 10 Total1 of 10Visit question mapNext

A decline in aggregate demand has caused a recession. The economy’s current level of real GDP is below its long-run equilibrium and the current price level is below the equilibrium price level. a. Without government action, the economy will return to long-run equilibrium through multiple choice 1a decrease in aggregate supply.a decrease in long-run aggregate supply.an increase in aggregate supply.an increase in long-run aggregate supply. b. If the government implements expansionary fiscal policy after the economy has self-corrected, the increase in aggregate demand will multiple choice 2decrease both real GDP and the price level.increase both real GDP and the price level.decrease real GDP and increase the price level.increase real GDP and decrease the price level. c. The slow fiscal policy will result in multiple choice 3low interest rates.high unemployment.demand-pull inflation.cost-push inflation.

Assume the economy is closed and there is no government. The aggregate demand components are described below:C = 100 + 0.6Y  (1)I = 200  (2)What is the aggregate demand of equilibrium?

100 4 16110 10 15140 14 12200 15 6Instructions: Use the tools provided 'AS' and 'AD' to plot the aggregate supply and aggregate demand curves (plot 4 points total for each curve).Instructions: Enter your responses as a whole number.Using the information in the table and graph, answer the following questions.What is the equilibrium price level?What is the equilibrium output?$ trillion in real GDP.If the quantity of output demanded at every price level increases by $2 trillion, what happens to equilibrium output and prices?Output .Prices .Graph your answer to part c.Instructions: Use the tool provided 'AD1' to draw the new aggregate demand curve (plot 4 points total). PrevQuestion 8 of 12 Total8 of 12Visit question mapNext

Suppose that in the following figure, investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP? a. $10 million b. $100 million c. $90 million d. $9 million

Assume the economy is closed and there is no government. The aggregate demand components are described below:C = 100 + 0.6Y (1)I = 200 (2)Now there is a boost in investment, and total investment is now 300.  What is the consumption of equilibrium?