Question:

Suppose the economy is experiencing a recessionary GDP gap of $1.250 billion and the marginal respending rate {MRR} is 0.6. An appropriate government fiscal policy to eliminate the recessionary gap would be to Select one: 0 a. reduce purchases by $500 billion. 0 b. increase purchases by $50 billion. 0 c. reduce purchases by $750 billion. 0 d. increase purchases by $500 billion. 0 e. increase purchases by $2,083 billion