If No Fiscal Policy Changes Are Made, Suppose the Current

Multiple Choice

If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume is 0.75, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:

A) government spending by $250 billion.
B) taxes by $100 billion.
C) taxes by $1,000 billion.
D) government spending by $1,000 billion.