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Narrbegin Exhibit 17

Question 66

Multiple Choice

Narrbegin Exhibit 17.1 Aggregate demand and supply model Narrbegin Exhibit 17.1 Aggregate demand and supply model -Suppose the economy in Exhibit 17.1 is in equilibrium at point E<sub>1</sub> and the marginal propensity to consume (MPC) is 0.8. Following Keynesian economics, to restore full employment, the government should cut taxes by: A) $200 billion. B) $250 billion. C) $500 billion. D) $1 trillion.
-Suppose the economy in Exhibit 17.1 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.8. Following Keynesian economics, to restore full employment, the government should cut taxes by:


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

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