In an Economy, the Government Wants to Increase Aggregate Demand

question 125

Multiple Choice

In an economy, the government wants to increase aggregate demand by $48 billion at each price level to increase real GDP and reduce unemployment.If the MPC is .75, then it could:

• A)reduce taxes by $12 billion.
• B)reduce taxes by $16 billion.
• C)reduce government spending by $12 billion.
• D)increase government spending by $18 billion.

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Definitions:

Medical Care

Professional services provided by healthcare practitioners to maintain, restore, or improve a person’s health.

Employment

A formal relationship between an individual and an employer where the individual performs work under certain conditions in exchange for compensation.

Age Cohort

A group of people who are born around the same time and share similar experiences or sociocultural influences throughout their lives.

Decade

A period of ten years.