If real GDP is $500 billion, full employment GDP is $200 billion, and the marginal propensity to consume is 0.75, then Congress should: a. increase government spending by $100 billion.

b. decrease taxes by $100 billion.

c. increase government spending by $75 billion.

d. increases taxes by $100 billion.

e. increase government spending by $300 billion.

Please explain why! Not sure how to do this type of problem. Thanks!

answer:

2

explanation:

1+1 = 2

the reason this is so is because of basic addition. we can double check this without using addition if you really want. if you take 1+1=x, subtract 1 from both sides than you get 1 = x - 1. subtract x from both sides and you get 1 - x = -1. subtract 1 from both sides again and you get -x = -2. finally, multiply both sides by -1 to get x = 2. subtraction is still technically addition you say? fine, have it your way. 1 + 1 = x. by definition, adding something to itself is the same thing as multiplying it by 2. this means we can technically rewrite the equation as

1 * 2 = x. now all we have to do is solve it. 1 * 2 = x when simplified results in 2 = x, or x = 2. this shows 1 + 1 = x. you say you want a real answer. you want me to start you from the ground up? well i would, but that would practically just be stealing from what was written on this website: go check it out if you really need to.