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Suppose that in the figure to the right, the government determined that the amount by which the AD curve had to be shifted directly rightward
Suppose that in the figure to the right, the government determined that the amount by which the AD curve had to be shifted directly rightward from point E, was equal to $1.26 trillion. If the government decided that a $0.11 trillion increase in real government spending was required to generate this shift, what must be the LRAS value of the MPC? The value of the MPC associated with this shift is . (Enter your response nco rounded to two decimal places.) SRAS Price Level 120 E2 110 E1 AD 2 AD 1 :17.5 18 Real GDP per Year ($ trillions)
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