Given a $600 billion AD shortfall and an MPC of 0.50, the desired fiscal stimulus would be:

A) A $1200 billion increase in government expenditures.
B) A $600 billion increase in government expenditures.
C) A $300 billion increase in government expenditures.
D) A $200 billion increase in government expenditures.

ANSWER:

A $300 billion increase in government expenditures.