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In an Economy, the Government Wants to Increase Aggregate Demand

Question 125

Multiple Choice

In an economy, the government wants to increase aggregate demand by $48 billion at each price level to increase real GDP and reduce unemployment.If the MPC is .75, then it could:


A) reduce taxes by $12 billion.
B) reduce taxes by $16 billion.
C) reduce government spending by $12 billion.
D) increase government spending by $18 billion.

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