Aplia Chapter 11

5. Fiscal Policy Analysis

Suppose that an economy is currently experiencing a Contractionary Gap due to a recession. The government decides to help the economy by increasing government spending on roadways and infrastructure projects. It increases government spending by $50 million. If the MPC is 0.75, by now much will Real GDP demanded change? (enter your answer in millions of dollars, i.e. an answer of $5,000,000 would be entered as "5").

Answer: $