Exhibit 20A-3 Macro AD/AS Model
-As shown in Exhibit 20A-3,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
Correct Answer:
Verified
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