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Exhibit 11-3 Aggregate Demand and Supply Model Suppose the Economy

Question 206

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Exhibit 11-3 Aggregate demand and supply model Exhibit 11-3 Aggregate demand and supply model Suppose the economy in Exhibit 11-3 is in equilibrium at point E<sub>1</sub> and the marginal propensity to consume (MPC) is 0.80. Following Keynesian economics, to restore full employment, the government should increase its spending by: A) $200 billion. B) $250 billion. C) $500 billion. D) $1 trillion. Suppose the economy in Exhibit 11-3 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.80. Following Keynesian economics, to restore full employment, the government should increase its spending by:


A) $200 billion.
B) $250 billion.
C) $500 billion.
D) $1 trillion.

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