In the Short-Run Keynesian Model, If the Mpc Equals 0

question 146

Multiple Choice

In the short-run Keynesian model, if the mpc equals 0.8, then to decrease aggregate spending by $30 billion at any output level, government spending must be decreased by ______ or net taxes must be increased by _____.

• A) $30 billion; $30 billion
• B) more than $30 billion; more than $30 billion
• C) less than $30 billion; less than $30 billion
• D) $30 billion; more than $30 billion