You currently work as an economic advisor to the US President. Assume that America's Aggregate Demand (AD) Shortfall is $800 billion. The MPC in America is 0.80. In order to stimulate the US economy and restore a Full-Employment equilibrium, you should advise the US President to initiate a/an:

 Increase in personal income tax rates (a tax hike)

Decrease in personal income tax rates (a tax cut)

Remains Same 

None of these

Answer rating: 100% (QA)

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