Suppose the Price Level Is fiXed, the MPC Is 0

question 133

Multiple Choice

Suppose the price level is fixed, the MPC is 0.8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly) , government should

• A) increase government expenditures by $200 billion.
• B) reduce taxes by $200 billion.
• C) increase government expenditures by $40 billion.
• D) reduce taxes by $160 billion.

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Definitions:

Permanent Storage

A term generally used to refer to the long-term preservation of data or information in a manner that prevents its loss over time.

Good Night's Rest

Adequate, quality sleep, typically considered to be around 7 to 9 hours for adults, which is essential for physical, mental, and emotional health.

Giraffes

Long-necked, hoofed mammals native to Africa, known for their tall stature, which allows them to access leaves and branches higher than other herbivores can reach.

Constant Illumination

A condition where an environment is continuously exposed to light, without periods of darkness.