Exhibit 16A-5 Macro AD\AS Models 
As shown in Exhibit 16A-5, 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 $.25 trillion
B) decreased by $.25 trillion
C) decreased by $2 trillion
D) increased by $2 trillion
E) increased by $1 trillion
Correct Answer:
Verified
Q3: Assume the economy is operating at a
Q16: Assuming the economy is experiencing a recessionary
Q17: Exhibit 16A-1 Policy Alternatives Q19: As shown in Panel (b)of Exhibit 16-2, Q22: Exhibit 16A-3 Macro AD\AS Models Q23: Exhibit 16A-4 Macro AD\AS Models Q24: Exhibit 16A-3 Macro AD\AS Models Q25: Exhibit 16A-4 Macro AD\AS Models Q34: Assuming an inflationary gap exists, classical economists Q172: Assume the economy is in short-run
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