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Assume the Federal government determines expansionary fiscal policy is necessary to increase GDP by $400 billion. Also assume the marginal propensity to consume is .9

Assume the Federal government determines expansionary fiscal policy is necessary to increase GDP by $400 billion. Also assume the marginal propensity to consume is .9 and the multiplier is 10. The Federal government can accomplish their intended target increase in GDP by:

a. Increasing government spending by $40 billion

b. Decrease in government spending by $40 billion

c. Decreasing taxes by $40 billion

d. Increasing taxes by $40 billion

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