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In an Economy, the Government Wants to Decrease Aggregate Demand

Question 129

Multiple Choice

In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPS is 0.25, then it could


A) increase taxes by $16 billion.
B) increase taxes by $24 billion.
C) decrease government spending by $10 billion.
D) decrease government spending by $16 billion.

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