If No Fiscal Policy Changes Are Made,suppose the Current Aggregate

question 36

Multiple Choice

If no fiscal policy changes are made,suppose the current aggregate demand curve will increase horizontally by $1000 billion and cause inflation.If the marginal propensity to consume is 0.75,federal policymakers could follow Keynesian economics and restrain inflation by decreasing:

• A)government spending by $250 billion.
• B)taxes by $100 billion.
• C)taxes by $1000 billion.
• D)government spending by $1000 billion.
• E)government spending by $750 billion.

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