Given a $600 billion AD shortfall and an MPC of 0.50, the desired fiscal stimulus would be:
A. A $1200 billion increase in government expenditures.
B. A $600 billion increase in government expenditures.
C. A $300 billion increase in government expenditures.
D. A $200 billion increase in government expenditures.
Answer:C
Given a $600 billion AD shortfall and an MPC of 0.50, the desired fiscal stimulus would be:
A. A $1200 billion increase in government expenditures. B. A $600 billion increase in government expenditures. C. A $300 billion increase in government expenditures. D. A $200 billion increase in government expenditures.