To Close an Inflationary Expenditure Gap of $20 Billion in an Economy

question 36

Multiple Choice

To close an inflationary expenditure gap of $20 billion in an economy with a marginal propensity to consume of 0.8, it would be necessary to:

• A) Decrease the aggregate expenditures schedule by $20 billion
• B) Decrease the aggregate expenditures schedule by $4 billion
• C) Increase the aggregate expenditures schedule by $20 billion
• D) Increase the aggregate expenditures schedule by $4 billion

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Definitions:

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A process wherein governments communicate and build relationships with foreign publics to achieve their political and diplomatic objectives.

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