Macro- Fiscal Policy and Multipliers Exactly. To increase GDP, we want to use expansionary AD, AS, P GDP Below fiscal policy. Area 1.1 Would you like to use a change in government spending or a change in taxes to do this expansionary policy? Planet Explor Price Level Potential GDP Amanda Kuhl AS I'll change taxes. Alien Advisor Very well - taxes it is! To do expansionary policy via a change in taxes, which should we do? Amanda Kuhl Increase taxes Alien Advisor AD Ah, no, sorry. To do expansionary fiscal policy, we decrease taxes . Real GDP Correct Answer: Decrease taxes Alien Advisor Our economists estimate that citizens in our country have an MPC of 0.60. We can fix the problem by increasing GDP by $1,500. How much should we decrease taxes? Enter a response then click Submit below Submit