Assume the marginal propensity to consume (MPC) is 0.75 and the economy is in recession with real GDP $1 trillion below full-employment real GDP. To achieve full employment, aggregate demand (AD) must be increased $2 trillion. Following discretionary fiscal policy, government spending should be increased:

Refer to the figure above. What is the initial equilibrium price of the good?

A) $20 B) $40 C) $60 D) $80

What is true of equilibrium in the game in Scenario 13.14?

A) In equilibrium, both firms choose Q = 50. B) In equilibrium, both firms choose Q = 100. C) There are two equilibria, at Q = 50 and at Q = 100. D) The only equilibrium is in mixed strategies. E) The two equilibria are those associated with the (40,30 ) outcome and the (30,40 ) outcome.