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 $100 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.
E) decreasing government tax revenue by approximately $33 billion.
Correct Answer:
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