Which of the following would be an appropriate fiscal policy to close a recessionary gap of $100 billion assuming an MPC of 0.80? (A) Increase government expenditures by $20 billion. (B) Decrease government expenditures by $100 billion. (C) Decrease personal income taxes by $20 billion. (D) Increase personal income taxes by $20 billion. (E) Purchase $20 billion in government securities in the open market.

Which of the following would be an appropriate fiscal policy to close a recessionary gap of $100 billion assuming an MPC of 0.80? (A) Increase government expenditures by $20 billion. (B) Decrease government expenditures by $100 billion. (C) Decrease personal income taxes by $20 billion. (D) Increase personal income taxes by $20 billion. (E) Purchase $20 billion in government securities in the open market.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter17: Stabilizing The National Economy

Section17.2: The Fiscal Policy Approach To Stabilization

Problem 1R

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