Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession.

a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $40 billion? $ 8.00 Numeric Response 1.Edit Unavailable. 8.00 .billion.

How large a tax cut would be needed to achieve the same increase in aggregate demand? $ 10.00 Numeric Response 2.Edit Unavailable. 10.00 .billion.

b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T).

Increase spending by$ 320 Numeric Response 3.Edit Unavailable. 320 .billion.

Increase taxes by $ 320 Numeric Response 4.Edit Unavailable. 320 .billion.