In the Basic Keynesian Model Where the Marginal Propensity to Consume

Multiple Choice

In the basic Keynesian model where the marginal propensity to consume is 0.5,government purchases must be ________,to close a recessionary gap resulting from a $1 billion decrease in autonomous consumption.

A) increased by $1 billion
B) decreased by $1 billion
C) increased by $2 billion
D) decreased by $2 billion
E) increased by $0.5 billion