Narrbegin Exhibit 17

question 57

Multiple Choice

Narrbegin Exhibit 17.2 Aggregate demand and supply model
-Suppose the economy in Exhibit 17.2 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E₂ and reduce inflation by:

• A) increasing government tax revenue by $6 billion.
• B) decreasing government tax revenue by $6.1 billion.
• C) decreasing government tax revenue by $200 billion.
• D) increasing government tax revenue by approximately $66 billion.

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