According to the Keynesian model, if a country experiences a recessionary gap of $100 billion andthe MPC is .8, which of the following do we need to get back to full employment?An increase in government spending of $500 billion.O An increase in government spending of $20 billion.An increase in government taxation of $400 billion.A decrease in government taxation of $400 billion.A decrease in government spending of $80 billion.

Spending multiplier =11-MPC=11-0.8=5

According to the Keynesian model, if a country experiences a recessionary gap of $100 billion and the MPC is .8, which of the following do we need to get back to full employment? An increase in government spending of $500 billion. An increase in government spending of $20 billion. An increase in government taxation of $400 billion. O A decrease in government taxation of $400 billion. O A decrease in government spending of $80 billion.

According to the Keynesian model, if a country experiences a recessionary gap of $100 billion and the MPC is .8, which of the following do we need to get back to full employment? An increase in government spending of $500 billion. An increase in government spending of $20 billion. An increase in government taxation of $400 billion. O A decrease in government taxation of $400 billion. O A decrease in government spending of $80 billion.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 5SQP

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