(3)Suppose that a country has an MPC of 0.9 and a real GDP of $400 billion. If its investment spending decreases by $4 billion, what will be its level of real GDP now?

(4)If an economy has an inflationary expenditure gap, the government could attempt to bring back the economy toward the full employment level of GDP by increasing/ decreasing taxes or by increasing/ decreasing government expenditures.

Check the correct option.