Question 34 2.5 Points Expansionary fiscal policy : A increases long-run aggregate supply. B decreases long-run aggregate supply. increases aggregate demand. D decreases aggregate demand Question 35 2.5 Points Given a marginal propensity to consume of 0.90, how much of increase/decrease in Government spending is needed to move the economy to the long run equilibrium (potential output)? Test 3-1.png ... Aggregate Price laval LRAS SRAS AD Real GDP in Trillions Potential Y= 110 GDP = 20 A 9 Trillion dollars increase in government spending. B 9 Trillion dollars decrease in government spending 10 Trillion dollars increase in government spending 10 Trillion dollars decrease in government spending