Simon was hired by the City Council of Economic Development (CCED) as an economic consultant. The chairperson of the CCED told Simon that she believed the current unemployment rate was too high. The unemployment rate can be reduced if the aggregate output increases. She wanted to know what policy to pursue to increase aggregate output by $400 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should Simon recommend? O increase government purchases by $100 billion. reduce the budget deficit by $400 billion. O reduce taxes by $100 billion. O reduce taxes by $100 billion and to increase government purchases by $50 billion.

Simon was hired by the City Council of Economic Development (CCED) as an economic consultant. The chairperson of the CCED told Simon that she believed the current unemployment rate was too high. The unemployment rate can be reduced if the aggregate output increases. She wanted to know what policy to pursue to increase aggregate output by $400 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should Simon recommend? O increase government purchases by $100 billion. reduce the budget deficit by $400 billion. O reduce taxes by $100 billion. O reduce taxes by $100 billion and to increase government purchases by $50 billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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