Suppose the Price Level Is fiXed, the MPC Is 0

question 214

Multiple Choice

Suppose the price level is fixed, the MPC is 0.5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly) , government should

• A) increase government expenditures by $80 billion.
• B) reduce government expenditures by $40 billion.
• C) reduce taxes by $40 billion.
• D) reduce taxes by $80 billion.

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Definitions:

Premises Liability

The legal responsibility of property owners for accidents and injuries that occur on their property due to their negligence.

Possessors

Individuals or entities that have control over or hold property, but do not necessarily own it.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources.

Social Guests

Individuals who are invited to visit someone's home or attend a private function or gathering without any expectation of providing a service or receiving payment.