Question 45 a. Suppose that there are no crowding-out effects and the MPC is 0.8. By how much must the government increase expenditures to shift the aggregate-demand curve right by $10 Not yet billion? answered Marked out of b. The model of Long-run Growth, proposes that fiscal policy can have lasting effects on savings, investment, and economic growth. On the other hand, the model of Aggregate 8.0 Demand-Aggregate Supply suggests that the only long-run effect of fiscal policy is an increase in the price level. How could you use the Aggregate Demand and Aggregate Supply Flag model for a more accurate description of the short-run and long-run effects of an increase in government spending? Could you distinguish between different uses of government question expenditures to predict their effects on prices and output? 1 B