Which of the Following Is the Best Choice to Eliminate

question 123

Multiple Choice

Which of the following is the best choice to eliminate a recessionary gap if the desired fiscal stimulus is $10 billion and the aggregate demand shortfall is $100 billion,while the MPC is 0.90?

• A)Tax hike of $11.11 billion.
• B)Tax cut of $11.11 billion.
• C)Tax hike of $10 billion.
• D)Tax cut of $10 billion.

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Definitions:

Traditional IRA

A type of retirement account allowing individuals to direct pre-tax income toward investments, with taxes deferred until withdrawal.

Roth IRA

An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year, with earnings being tax-free.

Deductible Contribution

A contribution or payment that can be subtracted from gross income to reduce taxable income, often related to charity or retirement savings.

Non-working Spouse

A spouse who does not engage in regular paid employment outside the home.