Exhibit 15-3 Aggregate Demand and Supply Model

question 159

Multiple Choice

Exhibit 15-3 Aggregate demand and supply model

-Suppose the economy in Exhibit 15-3 is in equilibrium at point E₁,and the marginal propensity to consume (MPC) is 0.75.Following Keynesian economics,to restore full employment,the government should cut taxes by:

• A) $0.20 trillion.
• B) $1 trillion.
• C) $0.5 trillion.
• D) $0.25 trillion.

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