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Exhibit 20A-4 Macro AD/AS Model

Question 10

Multiple Choice

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 0.75.Using discretionary fiscal policy,federal government spending should be ____ in order to restore the economy from E₁ to full employment. A) increased by $.25 trillion B) decreased by $.25 trillion C) decreased by $2 trillion D) increased by $2 trillion E) increased by $1 trillion
-As shown in Exhibit 20A-4,assume the marginal propensity to consume MPC equals 0.75.Using discretionary fiscal policy,federal government spending should be ____ in order to restore the economy from E₁ to full employment.


A) increased by $.25 trillion
B) decreased by $.25 trillion
C) decreased by $2 trillion
D) increased by $2 trillion
E) increased by $1 trillion

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