Assume the economy is in recession and real gdp is below full employment. themarginal propensity to consume (mpc) is 0.90, and the government follows keynesianeconomics by using expansionary fiscal policy to increase aggregate demand (totalspending). if an increase of $1,000 billion aggregate demand can restore full employment, the government should:

a. increase spending by $100 billion.
b. decrease spending by $790 billion.
c. increase spending by $1,000 billion.
d. increase spending by $250 billion.

a.increase spending by $100 billion.

Explanation:

For computing the effect, first we have to find out the multiplier then, the spending amount effect which is shown below:

Government spending multiplier = 1 ÷ (1 - marginal propensity to consume)

Government spending multiplier = 1 ÷ (1 - 0.90)

Government spending multiplier = 1 ÷ 0.10

So, Government spending multiplier = 10

Now the effect of spending would be

= Output level at full employment ÷ Government spending multiplier

= $1,000 billion ÷ 10

= $100 billion increase

the correct answer would be b, when, queen, calder hall and london.

explanation:

we always capitalize words when a paragraph or sentence is starting, when an important name is used, when a place is being written, or simply when a noun is used, etc. so in this sentence, sentence is starting from 'when', so it will be written in capital letters. secondly, queen is considered to be an important person, so it will also be written in capital letter. next, the name of the town is mentioned, i-e calder hall, which will also be written in capital letters. in the last,   city name is being used, 'london', which will also be written in capital letters. so option b is the most appropriate one.