Economics for Today 9th Edition by Irvin Tucker

Exercise 23

If no fiscal policy changes are implemented, suppose the future aggregate demand curve will exceed the current aggregate demand curve by $500 billion at any level of prices. Assuming the marginal propensity to consume (MPC) is 0.80, this increase in aggregate demand could be prevented by
A) increasing government spending by $500 billion.
B) increasing government spending by $140 billion.
C) decreasing taxes by $40 billion.
D) increasing taxes by $125 billion.