The Economy Is in Long-Run Equilibrium

Multiple Choice

The economy is in long-run equilibrium.Aggregate demand then shifts left $50 billion.The government wants to change its spending in order to avoid a recession.If the crowding-out effect is always half as strong as the multiplier effect,and if the MPC equals 0.9,by how much does government purchases have to change?

A) increase $10 billion
B) increase $50 billion
C) increase $100 billion
D) None of the above is correct.