Suppose the price level is ﬁxed, the MPC is 0.5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should
A) increase government expenditures by $80 billion.
B) reduce government expenditures by $40 billion.
C) reduce taxes by $40 billion.
D) reduce taxes by $80 billion.

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The Answer of Suppose the price level is ﬁxed, the MPC is 0.5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should
A) increase government expenditures by $80 billion.
B) reduce government expenditures by $40 billion.
C) reduce taxes by $40 billion.
D) reduce taxes by $80 billion.

Suppose the Price Level Is ﬁXed, the MPC Is 0