Using Multipliers to Determine the Shift of the Aggregate Demand Curve. a. Suppose the MPC is equal to 0.8. Government spending increases by $20 billion. How far does the aggregate demand curve shift...

Using Multipliers to Determine the Shift of the Aggregate Demand Curve.

a. Suppose the MPC is equal to 0.8. Government spending increases by $20 billion. How far does the aggregate demand curve shift to the right?

b. Now suppose that the MPC is 0.8 and the marginal propensity to import is 0.2. How far to the right will the $20 billion in government spending shift the aggregate demand curve?