Answer:
a. Structures deficit decreased from $4.5 billion to a surplus of $2 billion, therefore the amount of fiscal restraint that occured between 1931 and 1933 is $6.5 billion.
b. Using the formula
Change in aggregate demand = 1/1- mpc x change in fiscal restraint
= 1/1-0.8×(-6.5)
= 1/0.2x(-6.5)
= 5x-6.5
= -$32.5 billion
Answer:
hi your question is incomplete attached to the answer is the complete question
answer : A ) $6 billion
B) -$50 billion
Explanation:
A) The fiscal restraint that occurred between 1931 and 1933 from the given graph below is = +2 - (-4)
= + 2 + 4 = $6 billion
B) By how much did this policy reduce aggregate demand if the MPC was 0.88
using this formula =
[tex]\frac{1}{1-mpc} * fiscal restraint[/tex]
= [tex]\frac{1}{1 - 0.88 } * 6[/tex] = [tex]\frac{1}{0.12} * 6[/tex] = $49.99 ≈ $50 billion
