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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Definitions:

Pounds Of Rice

A unit of measurement representing the weight of rice, commonly used in both retail and wholesale contexts.

Trade

The transaction involving goods, services, or both between two or more parties, either domestically or internationally.

Willing

Reflects an individual's readiness or inclination to perform a certain action or make a choice under given conditions.

Comparative Advantage

The ability of an entity to produce a particular good or service at a lower opportunity cost than another, leading to more efficient international trade and resource allocation.