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Exhibit 20A-4 Macro AD/AS Model

Question 14

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Exhibit 20A-4 Macro AD/AS Model
Exhibit 20A-4 Macro AD/AS Model -As shown in Exhibit 20A-4,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 $1.6 trillion B) decreased by $1.6 trillion. C) increased by $.20 trillion, D) increased by $.20 trillion E) increased by $.80 trillion
-As shown in Exhibit 20A-4,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 $1.6 trillion
B) decreased by $1.6 trillion.
C) increased by $.20 trillion,
D) increased by $.20 trillion
E) increased by $.80 trillion

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