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(Solved): help please! The graph below depicts an economy where a decline in aggregate demand has caused a rec ...



help please!
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides
Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus aign.
a. How much do
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 changing taxes to reduce the burden of this recession. Fiscal Policy Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus aign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? billion b. If the MPC is \( 0.75 \), how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Suppose instead that the MPC is 0.6. c. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by \( \$ \) billion and taxes need to change by \( \$ \)


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Answer :- [a] To restore the aggregate demand, government had to reduce = 400-280 = $120 billion. Thus, the required change expected is a reduction of
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