Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:
A) decreasing tax revenues by $600 billion.
B) decreasing transfer payments by $200 billion.
C) increasing tax revenues by $200 billion.
D) increasing government purchases by $150 billion.
Correct Answer:
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Q1: Narrbegin Exhibit 17.2 Aggregate demand and supply
Q2: The deliberate use of changes in government
Q4: If the economy is experiencing unemployment, then
Q5: If the MPC is 0.6 and if
Q6: If the marginal propensity to consume (MPC)
Q7: Narrbegin Exhibit 17.1 Aggregate demand and supply
Q8: It is inflationary for government to increase
Q9: If government reduces taxes by $10 billion
Q10: Narrbegin Exhibit 17.1 Aggregate demand and supply
Q96: Assume the marginal propensity to consume (MPC)
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