In the basic Keynesian model where the marginal propensity to consume is 0.5,transfer payments must be _______,to close a recessionary gap resulting from a $1 billion decrease in autonomous consumption.

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In the Keynesian model, the spending multiplier is 1/(1-MPC). With an MPC of 0.5, the multiplier is 2. To close a $1 billion gap, transfer payments must increase by $2 billion, as the multiplier effect will result in a $2 billion increase in total spending.

In the Basic Keynesian Model Where the Marginal Propensity to Consume