Suppose That the Economy Has an Expansionary Gap of $1,000

question 103

Multiple Choice

Suppose that the economy has an expansionary gap of $1,000 and the MPC equals 0.8.With an upward-sloping short-run aggregate supply curve,the government can close the gap if it increases autonomous net taxes by

• A)$1,000
• B)$800
• C)$250
• D)more than $250
• E)less than $250

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Definitions:

George Curzon

A British Conservative statesman who served as Viceroy of India and was influential in the foreign policy of the early 20th century, focusing on expansion and defense of the British Empire.

British Viceroy

A high official who ruled a country or a colony in the name of and as the representative of the monarch of the United Kingdom.

"Open Door" Policy

A diplomatic principle proposed by the United States in 1899 aimed at promoting equal trading rights among all countries in China and preserving Chinese territorial integrity.

European Army

A hypothetical or proposed unified armed forces entity representing the collective military capabilities of European Union member states.