In the short-run Keynesian model, if the mpc equals 0.8, then to increase planned aggregate spending by $20 billion at any output level, government spending must be increased by or net taxes must be decreased by .

increased by $20 billion for government spending ; MORE THAN $20 billion decreaae for net taxes

Explanation:

The Keynesian model is is an economic theory developed by the British economist John Maynard Keynes during the 1930s that considers total spending in the economy and how it affects on output and inflation. This model believes that INCREASE I

government expenditures and DECREASE in net taxes can stimulate demand and pull the global economy out of the depression.

Therefore in the short run Keynesian model, as given in the question, increase planned aggregate spending by $20 billion at any output level means that government spending must be increased by $20 billion and net decreased by more than $20 billion.

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