(Answered) Assume that equilibrium output is 10 billion while

Economics

Assume that equilibrium output is $10 billion while potential output is $20 billion. If the marginal propensity to consume is 0.8, which of the following recommendations would a Keynesian economist recommend?

Congress should increase taxes by $2 billion.
Congress should increase taxes by $10 billion.
Congress should increase spending by $10 billion.
Congress should increase spending by $2 billion.
Congress should increase spending by $5 billion.

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