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Narrbegin Exhibit 17

Question 57

Multiple Choice

Narrbegin Exhibit 17.2 Aggregate demand and supply model Narrbegin Exhibit 17.2 Aggregate demand and supply model -Suppose the economy in Exhibit 17.2 is in equilibrium at point E<sub>1</sub> and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E<sub>2</sub> and reduce inflation by: A) increasing government tax revenue by $6 billion. B) decreasing government tax revenue by $6.1 billion. C) decreasing government tax revenue by $200 billion. D) increasing government tax revenue by approximately $66 billion.
-Suppose the economy in Exhibit 17.2 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E2 and reduce inflation by:


A) increasing government tax revenue by $6 billion.
B) decreasing government tax revenue by $6.1 billion.
C) decreasing government tax revenue by $200 billion.
D) increasing government tax revenue by approximately $66 billion.

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