Exhibit 11-3 Aggregate demand and supply model 
Suppose the economy in Exhibit 11-3 is in equilibrium at point E1, and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, to restore full employment, the government should cut taxes by:
A) $0.20 trillion.
B) $1 trillion.
C) $0.5 trillion.
D) $0.25 trillion.
Correct Answer:
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