If No Fiscal Policy Changes Are Made, Suppose the Current

question 195

Multiple Choice

If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume (MPC) is 0.80, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:

• A) government spending by $200 billion.
• B) taxes by $100 billion.
• C) taxes by $1,000 billion.
• D) government spending by $1,000 billion.

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Definitions:

Religious Violence

Acts of violence and conflict motivated by religious differences or beliefs, often resulting in social tension or warfare.

France and Spain

European countries known for their rich history, cultural heritage, and significant roles in world affairs, including periods of rivalry and alliance.

Florida

A southeastern U.S. state known for its tropical climate, extensive coastlines, diverse wildlife, and as a popular tourist destination.

European Settlement

The establishment of communities and colonies in non-European lands by European explorers and settlers, often resulting in significant cultural, social, and political changes.