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Exhibit 20A-3 Macro AD/AS Model

Question 2

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Exhibit 20A-3 Macro AD/AS Model
Exhibit 20A-3 Macro AD/AS Model -As shown in Exhibit 20A-3,assume the marginal propensity to consume MPC equals 0.80.Using discretionary fiscal policy,federal government spending should be ____ in order to restore the economy from E₁ to full employment. A) increased by $2 trillion B) decreased by $2 trillion C) decreased by $.40 trillion D) increased by $.40 trillion E) increased by $.80 trillion
-As shown in Exhibit 20A-3,assume the marginal propensity to consume MPC equals 0.80.Using discretionary fiscal policy,federal government spending should be ____ in order to restore the economy from E₁ to full employment.


A) increased by $2 trillion
B) decreased by $2 trillion
C) decreased by $.40 trillion
D) increased by $.40 trillion
E) increased by $.80 trillion

Correct Answer:

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