Multiple Choice
Which of the following is the best choice to eliminate a recessionary gap if the desired fiscal stimulus is $10 billion and the aggregate demand shortfall is $100 billion,while the MPC is 0.90?
A) Tax hike of $11.11 billion.
B) Tax cut of $11.11 billion.
C) Tax hike of $10 billion.
D) Tax cut of $10 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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