The King of Rococo hires you as an economic consultant. He is ...

[maegan_martin]

The King of Rococo hires you as an economic consultant. He is concerned that the output level in Rococo is too high and that this will cause prices to rise. He feels that it is necessary to reduce output by $100 billion. He tells you that the 
MPC in Rococo is 0.9. Which of the following would be the best advice to give to the King of Rococo?

◦ Increase government spending in Rococo by $100 billion.
◦ Increase taxes in Rococo by $100 billion.
◦ Reduce government spending in Rococo by $90 billion.
◦ Reduce government spending in Rococo by $10 billion.

[Liddy]

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[maegan_martin]

TY

[Liddy]

You're welcome