Exhibit 20A-4  Macro AD/AS Model as Shown in Exhibit 20A-4

question 226

Multiple Choice

Exhibit 20A-4  Macro AD/AS Model As shown in Exhibit 20A-4, assume the marginal propensity to consume MPC equals 0.80. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment.

• A) increased by $1.6 trillion
• B) decreased by $1.6 trillion
• C) increased by $.20 trillion
• D) increased by $.20 trillion.
• E) increased by $.80 trillion

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Definitions:

Cognitive Stimulation

Activities or interventions designed to enhance mental processes such as memory, attention, and problem-solving skills.

Daycare Benefits

Advantages associated with the use of daycare services, including socialization, educational opportunities, and provision of a structured environment for children.

Politeness

A social behavior that is respectful and considerate of others, often governed by cultural norms and used to facilitate smooth social interactions.

Maternal Employment

The participation of mothers in the labor force, including their balance between work responsibilities and family life.