As population declines, scarcity eventually disappears

Contractionary fiscal policy uses ________ government spending and ________ taxes to increase aggregate economic activity

A) lower; higher B) higher; lower C) higher; higher D) lower; lower

Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)

A) increase in equilibrium real GDP equal to $500 billion. B) increase in equilibrium real GDP equal to $800 billion. C) decrease in equilibrium real GDP equal to $800 billion. D) decrease in equilibrium real GDP equal to $500 billion.