Exhibit 17-1 Aggregate Demand and Supply Model

question 24

Multiple Choice

Exhibit 17-1 Aggregate demand and supply model

-Suppose the economy in Exhibit 17-1 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.8.Following Keynesian economics,to restore full employment,the government should cut taxes by:

• A)$200 billion.
• B)$250 billion.
• C)$500 billion.
• D)$1 trillion.

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Definitions:

Consistency

The degree of viscosity or firmness of a substance, or the uniformity in the application or adherence to the same principles over time.

Concise Language

The use of few words to convey a message clearly and directly, avoiding unnecessary detail and redundancy.

Concise Language

The use of few words without sacrificing clarity to convey a message effectively.

Blood Vessels

Tubular structures in the circulatory system that transport blood throughout the body, including arteries, veins, and capillaries.