Given Suppose in an effort to stimulate aggregate demand the government mails tax rebate checks to all household totaling 50 billion for the
Given Suppose in an effort to stimulate aggregate demand the government mails tax rebate checks to all
Given Suppose in an effort to stimulate aggregate demand the government mails tax
effort to stimulate aggregate demand the government mails tax rebate checks to all household totaling billion for the
Given Suppose in an effort to stimulate aggregate demand the government
mails tax rebate checks to all household totaling billion for the
Given Suppose in an effort to stimulate aggregate
Given Suppose in an
Given: Suppose in an effort to stimulate aggregate demand, the government mails tax rebate checks to all household, totaling $50 billion for the...

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Given: Suppose in an effort to stimulate aggregate demand, the government mails tax rebate checks to all household, totaling $50 billion for the economy as a whole. Ignore crowding-out effect. A) If the marginal propensity to consume (MPC) is 0.90, by how much would you expect these tax rebates to initially increase aggregate demand? Show your calculations step-by-step. B) TRUE OR FALSE: Holding other things constant, a higher MPC is bound to yield a larger impact on the initial demand. C) Including the multiplier effect, what is the total effect of these tax rebates on the aggregate demand. Show your calculations step-by-step D) TRUE OR FALSE: Holding other things constant, a higher MPC is bound to yield a lower impact on the total demand. E) How does the total effect of this policy compare to the total effect of a $50 billion increase in government spending? Show your calculations step-by-step

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