1. If real GDP is $500 billion, full-employment GDP is $300 billion, and the marginal propensity to consume is 0.9, then Congress should

a. increase taxes by exactly $20 billion.

b. increase taxes by $50 billion.

c. increase taxes by $22.22 billion.

d. decrease spending by $30 billion.

e. decrease spending by $50 billion.

LRAS PL SRAS1 AD1 Y1 Yf RGDP = YPL ASLR ASSR1 P1 --... P2 AD1 Yf Y1 RGDP = Y\f