Price level(CPT)11010510095ASFulemployment,50 151Real GDPAD₁(trillions of dollars per year)Suppose the economy in Exhibit 11-2 is in equilibrium at point E, and the marginal propensity to consume (MPC) is 0.75. FollowingKeynesian economics, the federal government can move the economy to full employment at point E₂ by:A increasing government tax revenue by approximately $33 billion.B decreasing government tax revenue by $100 billion.increasing government tax revenue by $100 billion.decreasing government tax revenue by $750 billion.decreasing government tax revenue by approximately $33 billion.

The given issue is a practice in macroeconomics, explicitly in the Keynesian economic framework. The…

110 Price level 105 (CPT) 100 96 y. AS Ful employment 50 151 Real GDP AD AD₁ (trillions of dollars per year) Suppose the economy in Exhibit 11-2 is in equilibrium at point E, and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by: increasing government tax revenue by approximately $33 billion. B decreasing government tax revenue by $100 billion. increasing government tax revenue by $100 billion. decreasing government tax revenue by $750 billion. decreasing government tax revenue by approximately $33 billion.

110 Price level 105 (CPT) 100 96 y. AS Ful employment 50 151 Real GDP AD AD₁ (trillions of dollars per year) Suppose the economy in Exhibit 11-2 is in equilibrium at point E, and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by: increasing government tax revenue by approximately $33 billion. B decreasing government tax revenue by $100 billion. increasing government tax revenue by $100 billion. decreasing government tax revenue by $750 billion. decreasing government tax revenue by approximately $33 billion.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.8P

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