2. Discretionary fiscal policy and multiplier effects Consider a hypothetical economy in which the marginal propensity to consume {MPG} is 0.5. The following graph shows the aggregate demand curves {Al and A32), the short-run aggregate supply curve (SEAS), and the long-run aggregate supply curve (LRAS). The economy is currently at point A. \fThe economy is currently experiencing gap of $ billion. In order to close this gap, one option would be for the government to government purchases by $ billion (assuming net taxes do not change). If the government kept its purchases constant, it could also close the gap by net taxes by billion