Exhibit 15-2 Aggregate demand and supply model
Suppose the economy in Exhibit 15-2 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E2 by:
A) decreasing government tax revenue by approximately $33 billion.
B) decreasing government tax revenue by $750 billion.
C) increasing government tax revenue by $100 billion.
D) increasing government tax revenue by approximately $33 billion.
Correct Answer:
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Q21: If the marginal propensity to consume (MPC)
Q22: If the marginal propensity to save (MPS)
Q24: A tax multiplier equal to − 4.30
Q25: If the marginal propensity to consume =
Q26: The change in saving divided by the
Q27: Find the tax multiplier if the MPC
Q31: Exhibit 15-1 Disposable income and consumption
Q32: An increase in government spending by $100
Q35: Assume that an economy's spending multiplier is
Q45: The sum of the marginal propensity to
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