1. What are the factors that affect the amounts that consumers, businesses, gove
ID: 1120086 • Letter: 1
Question
1. What are the factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the: (Ipoint) 2. If investment increases by $20 billion and the economy's MPC is.75, the aggregate demand curve will shift rightward or leftward and by how much? (4points). 3. Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC 0.4, how much will the change in investment increase aggregate demand? (4points).Explanation / Answer
1) the factors that affect the amount that consumers, businesses, government, and foreigners wish to purchase at each price level are the determinants of aggregate demand.
2) aggregate demand curve will shift rightward by $80.
aggegate demand = investment * (1/1-MPC)
= 20 * (1/1-0.75)
= 20 * 4
= $80
3) aggegate demand = technology investment * (1/1-MPC)
= 20 * (1/1-0.4)
= 20 * 1.66
= $33.33
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