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 0.80. Following Keynesian economics, to restore full employment, the government should increase its spending by:
A) $200 billion.
B) $250 billion.
C) $500 billion.
D) $1 trillion.
Correct Answer:
Verified
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A)1
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