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An economy is initially in longrun equilibrium with a price level of 100 and real GDP of $5 billion. Then. an increase in demand for exports shifts demand from ADl to AD2 . This causes GDP to increase to $7 billion and the price level to increase to 110. The federal government decides to cut government spending in order to return to the longrun equilibrium and price level. The marginal propensity to consume is 0.5. How much should the government reduce spending by? A. $1 billion B. $1.5 billion C. 52 billion D. $3 billion