Suppose the government reduces taxes by $20 million, that there is no crowding-out effect, and that the marginal propensity to consume is 0.9. What is the total effect on aggregate demand? What would be the total effect on aggregate demand if the government increased purchases by $20 million?

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The Answer of Suppose the government reduces taxes by $20 million, that there is no crowding-out effect, and that the marginal propensity to consume is 0.9. What is the total effect on aggregate demand? What would be the total effect on aggregate demand if the government increased purchases by $20 million?

Suppose the Government Reduces Taxes by $20 Million, That There