Assume that we want to drive our economy out of recession by generating a $400 billion change in national income. The MPC is 0.8 . Which of the following policy prescriptions would generate the targeted $400 billion change in income?

a. $120 billion increase in government spending and $50 billion increase in tax revenue
b. $140 billion increase in government spending and $70 billion increase in tax revenue
c. $160 billion increase in government spending and $120 billion increase in tax revenue
d. $220 billion increase in government spending and $100 billion increase in tax revenue
e. $400 billion increase in government spending and $300 billion increase in tax revenue


A

Economics

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Economics