Suppose the price level is fixed,the MPC is .5,and the GDP gap is a negative $100 billion.To achieve full-employment output (exactly),government should:

Name: Suppose the price level is fixed,the MPC is .5,and the GDP gap is a negative $100 billion.To achieve full-employment output (exactly),government should:
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The multiplier effect is 1/(1-MPC) = 2. To close a $100 billion GDP gap, government expenditures should increase by $50 billion, as the multiplier will double this to $100 billion.

Suppose the Price Level Is Fixed,the MPC Is