Which of the following measures will enable the government to close a contractionary gap of -20,000 when the marginal propensity to consume is 0.8? Group of answer choices a. Increase government spending by 15,000 b. Increase taxes by 5,000 c. Increase both government spending and taxes by 20,000 d. Decrease both government spending and taxes by 20,000
Which of the following measures will enable the government to close a contractionary gap of -20,000 when the marginal propensity to consume is 0.8? Group of answer choices a. Increase government spending by 15,000 b. Increase taxes by 5,000 c. Increase both government spending and taxes by 20,000 d. Decrease both government spending and taxes by 20,000
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 4SQP
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Question
Which of the following measures will enable the government to close a contractionary gap of -20,000 when the marginal propensity to consume is 0.8?
Group of answer choices
a. Increase government spending by 15,000
b. Increase taxes by 5,000
c. Increase both government spending and taxes by 20,000
d. Decrease both government spending and taxes by 20,000
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