If the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion by: reducing government expenditures by $125 billion. reducing government expenditures by $20 billion. increasing taxes by $50 billion. increasing taxes by $250 billion.

If the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion by: reducing government expenditures by $125 billion. reducing government expenditures by $20 billion. increasing taxes by $50 billion. increasing taxes by $250 billion.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter21: Fiscal Policy

Section: Chapter Questions

Problem 20SQ

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Question

If the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion by:
1. reducing government expenditures by $125 billion.
2. reducing government expenditures by $20 billion.
3. increasing taxes by $50 billion.
4. increasing taxes by $250 billion.

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