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NYC NYC
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8 years ago
You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The chairperson of the BEA tells you that he believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. He wants to know what policy to pursue to increase aggregate output by $400 billion. The best estimate he has for the MPC is 0.5. Which of the following policies should you recommend?
A) increase government spending by $200 billion and reduce taxes by $400 billion
B) reduce government spending by $200 billion and reduce taxes by $100 billion
C) increase government spending by $400 billion and taxes by $300 billion
D) increase both government spending and taxes by $400 billion
Textbook 
Principles of Macroeconomics

Principles of Macroeconomics


Edition: 11th
Authors:
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JesslynJesslyn
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NYC Author
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#2
8 years ago
Good answer, thanks.
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