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Suppose That in an Economy with a MPC of

Question 96

Multiple Choice

Suppose that in an economy with a MPC of .5 the government wanted to shift the aggregate demand curve rightward by $80 billion at each price level to expand real GDP.It could:


A) reduce taxes by $160 billion.
B) increase government spending by $80 billion.
C) reduce taxes by $40 billion.
D) increase government spending by $40 billion.

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