How much is induced consumption when disposable income is $400 billion?

If money income increases, a consumer's budget line

A) becomes flatter. B) becomes steeper. C) shifts rightward and its slope does not change. D) shifts leftward and its slope does not change.

According to the Keynesian view, the proper response to a severe recession would be

a. an increase in taxes in order to reduce the budget deficit. b. an increase in government spending financed by borrowing. c. a shift toward a restrictive monetary policy to reduce aggregate demand. d. reliance on automatic stabilizers to direct the economy toward full employment.