Exhibit 16A-4 Macro AD\AS Models As shown in Exhibit 16A-4, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment. A)increased by $1 trillion B)increased by $2 trillion C)decreased by $2 trillion D)increased by $.50 trillion E)increased by $.80 trillion

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The Answer of Exhibit 16A-4 Macro AD\AS Models As shown in Exhibit 16A-4, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment. A)increased by $1 trillion B)increased by $2 trillion C)decreased by $2 trillion D)increased by $.50 trillion E)increased by $.80 trillion

Exhibit 16A-4 Macro AD\AS Models as Shown in Exhibit