Real wages fall if prices increase more than nominal wages

Everything else held constant, a decrease in government spending will cause the IS curve to shift to the ________ and aggregate demand will ________

A) right; increase B) right; decrease C) left; increase D) left; decrease

The total expenditure schedule in Macroland begins with these initial levels (in billions of dollars): Income = 1,000 . Consumption = 900; Investment = 200; Government = 300; Net Exports = ?100 . If the MPC = 0.75 and income increases in increments of

200, find the equilibrium level of income. If full employment requires an income level of 2,000 . what (if anything) should the government do? Indicate both the direction of the spending change and the size of the spending change.