If No Fiscal Policy Changes Are Implemented to Fight Inflation

question 59

Multiple Choice

If no fiscal policy changes are implemented to fight inflation, suppose the aggregate demand curve will exceed the current aggregate demand curve by $900 billion at any level of prices. Assuming the marginal propensity to consume is 0.90, this increase in aggregate demand could be prevented by:

• A) increasing government spending by $500 billion.
• B) increasing government spending by $140 billion.
• C) decreasing taxes by $40 billion.
• D) increasing taxes by $100 billion.

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Definitions:

Standard Module

In programming, a code module that contains general procedures and functions that can be referenced from anywhere within the application.

Function Procedure

A block of code within programming that performs a specific task and can return a value, used to modularize and simplify coding.

Query

A request for information from a database, specifying criteria to select and retrieve data.

Global Code

Code that is accessible from any point within the scope of an application, not limited by local context.