Exhibit 20A-3  Macro AD/AS Model

question 92

Multiple Choice

Exhibit 20A-3  Macro AD/AS Model
As shown in Exhibit 20A-3, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment.

• A) increased by $1 trillion
• B) increased by $2 trillion
• C) decreased by $2 trillion
• D) increased by $.50 trillion
• E) increased by $.80 trillion

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Definitions:

Pay Structures

A hierarchy within an organization that defines the pay levels and scales for different positions and roles based on various factors like seniority, skill level, and performance.

Insurance Policies

Contracts between an insurer and a policyholder that provide financial protection against loss or damage in exchange for premium payments.

Paid Vacation

An employment benefit that allows employees to enjoy a certain amount of paid time off, providing them with rest and recreation without loss of income.

More Than 100 Employees

A classification indicating that a business has exceeded the threshold of 100 employees, often marking a shift in regulatory, operational, and human resource requirements.