Suppose that full employment real GDP is 100, but the actual equilibrium real GDP is 60, and the marginal propensity to consume
is 0.75. What is the appropriate macroeconomic policy to use to
bring back the economy to full employment and by how much should
the appropriate tool of the policy chosen increase?
A. Monetary policy by increasing the interest rate by 6%,
B. Fiscal policy by increasing the federal fund rate by 10%
C. Contractionary policy by increasing government spending by 60
D. Expansionary fiscal policy that increases spending by 10.