Exhibit 16A-5 Macro AD\AS Models As shown in Exhibit 16A-5, assume the marginal propensity to consume MPC equals 0.80. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment. A)increased by $1.6 trillion B)decreased by $1.6 trillion C)increased by $.20 trillion D)increased by $.80 trillion

Question

Quizplus · Accepted Answer

The Answer of Exhibit 16A-5 Macro AD\AS Models As shown in Exhibit 16A-5, assume the marginal propensity to consume MPC equals 0.80. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment. A)increased by $1.6 trillion B)decreased by $1.6 trillion C)increased by $.20 trillion D)increased by $.80 trillion

Exhibit 16A-5 Macro AD\AS Models as Shown in Exhibit