Exhibit 20A-3 Macro AD/AS Model

question 24

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:

Indorser

An entity or person who signs the back of a negotiable instrument, such as a check or promissory note, thereby transferring ownership or guaranteeing payment to another party.

Instrument

A tool or device used for a specific purpose, often referring to musical instruments or legal documents.

Maker

Typically refers to the individual or entity that creates or executes a financial instrument, like a check or promissory note, thereby committing to the terms outlined therein.

Overdue

When an instrument is not paid when due or at maturity.