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If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume is 0.75, federal policymakers could follow Keynesian economics and restrain inflation by:

a) Decreasing government spending by $250 billion.

b) Increasing taxes by $250 billion.

c) Increasing taxes by $750 billion.

d) Decreasing government spending by $750 billion.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91236044

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